The FTSE 250 has rebounded by over 35% since hitting a multi-year low of 13,000 in March. However, despite this performance, several shares in the index still appear to offer excellent value for money.
These companies continue to face significant risks. For example, a second wave of coronavirus could cause another market slump.
Nevertheless, over the long run, these shares could offer improving total returns. With that in mind, here are two FTSE 250 stocks that may have the potential to double investors’ cash over the next few years when owned as part of a portfolio.
FTSE 250 stocks on offer
Lockdown measures introduced over recent months have had a significant impact on the financial performance of FTSE 250 outsourcing group Capita (LSE: CPI).
In its latest trading update, the company pulled its earnings projections for the year citing the coronavirus outbreak.
However, the company isn’t as exposed as many other businesses. Around 50% of revenues come from the UK government, for which Capita runs a range of essential services. The group has also been winning new contracts over the past few months.
Management has taken salary cuts and staff have been furloughed to help cushion the impact of the outbreak on the firm’s bottom line. The FTSE 250 group expects these efforts will be enough to help see Capita through the crisis.
As such, Capita seems well-placed to navigate the crisis and could come out stronger on the other side. Indeed, before coronavirus, it was making encouraging progress in delivering on its new strategy.
The group’s reputation, size and diverse range of services mean it may offer long-term recovery potential after its 73% share price decline since the start of the year.
Another FTSE 250 company that could help double investors’ money is Forterra (LSE: FORT).
A leading UK producer of manufactured masonry products, Forterra’s sales took a big it when the UK went into lockdown at the end of March. But, it has staged a rapid recovery as the economy has started to open up again.
Its latest trading update reported that sales had recovered to 50% of corresponding 2019 levels in May. In April, sales had fallen a staggering 90% year-on-year. For the full-year, management is projecting a decline in sales of around 20%.
Despite this, the overall share price performance of Forterra has been relatively underwhelming over the past two months. The FTSE 250 stock is only trading slightly above the level it was when the UK went into lockdown at the end of March.
Therefore, now could be an excellent time to snap up a share in the business as its recovery takes shape. Even though the company is forecasting a decline in sales of only 20% for 2020, the stock has fallen 50% since mid-February.
This suggests the shares offer a margin of safety after recent declines and could help investors double their money when owned alongside other undervalued FTSE 250 stocks like Capita.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.