The FTSE 250 has dropped by 20% in the year-to-date, as the fallout from the coronavirus outbreak continues. For FTSE 250 investors, this could be a once in a lifetime opportunity to buy shares in great companies at bargain prices. Many industries have been affected in ways that once would have been unimaginable. However, it’s still possible to pick up some real gems.
I’ve identified two shares that could be worth buying now.
A cheap FTSE 250 share?
The National Express (LSE: NEX) share price has fallen by 62% in the year-to-date. As the public was in lockdown for several months, this won’t be a surprise to most investors. This drop means the company is trading with a price-to-earnings ratio of just 5.
However, before the coronavirus outbreak properly hit the stock market, the shares were on an upward trajectory. If we look from January 2010 to January 2020, the National Express share price had increased by roughly 130%.
Is the market pricing this FTSE 250 stock unfairly today? I think so. Undoubtedly, the group has been hugely impacted by the coronavirus outbreak. Revenue in April was reported to be down by 50% compared with 2019. However, the company’s positive EBITDA was ahead of expectations. Cash flow levels were positive, also ahead of expectations. This was partly down to reducing monthly operating costs by £100m.
With coach services set to resume this month, it’s possible that revenues will slowly return to normal levels. Of course, this depends on customer confidence. Will the general public feel comfortable enough to travel on coaches?
With operations around the world, National Express is one of the FTSE 250 companies that has been severely impacted by the coronavirus outbreak. In the long term, I think that customers will continue to use its services, and now could be a great time to buy and hold its shares.
Britvic share price
In the year-to-date, Britvic‘s (LSE: BVIC) share price has dropped by 13%. This slump means the stock now has a price-to-earnings ratio of 12.
Despite the coronavirus outbreak, in May the company reported a good start to the year. Revenue increased by 1.4% for the 26 weeks to 31 March, which was driven by customer favourites, such as Robinsons, Tango, Pepsi and 7UP. Its profit after tax for the period increased by 11.5% to £38.9m
Unsurprisingly, with the shutdown of the hospitality industry, out-of-home sales have dropped. But this has been mitigated by an increase in at-home consumption.
Britvic has deferred its decision on its dividend until later in the year, a move that other FTSE 250 companies have also taken. Although this might be difficult for some investors to stomach, I think this is the right call. The company ultimately wants to protect its liquidity, and given the current situation, this is a wise move.
For me, Britvic ticks the box of having a strong portfolio of brands and economic moat against its competition. I think the company has proved its resilience by weathering the current coronavirus crisis so far. I’d buy now.
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T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. 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.