A great deal of investing coverage is devoted to FTSE 100 stocks, which makes sense as the companies within the index are the largest by market capitalisation. Actions by these firms have the potential to impact the economy to a greater extent than smaller companies within the FTSE 250. But at the same time, FTSE 250 stocks can still be great to buy. Their share prices can still move significantly higher, which at the end of the day is the metric I use to judge a successful investment! So here are some FTSE 250 stocks I’m looking to buy for 2021.
Strong performance
The Scottish Mortgage Investment Trust is actually a member of the FTSE 100, but I need to mention it to make a point about my first FTSE 250 share. Scottish Mortgage’s share price doubled in value last year, making it one of the top-performing stocks in the index for 2020. The fund is managed by Baillie Gifford, headquartered out of Scotland.
You might not know that another fund managed by the team is performing well as a FTSE 250 stock. This is the Baillie Gifford US Growth Trust. As the name suggests, the publicly-listed fund invests mostly in US-based companies. Its top three holdings are Tesla, Shopify and Amazon. It’s no surprise then that the share price has more than doubled over the past year (up 119%).
Sticking to strong share price performance, another stock I’m thinking of buying for 2021 is Watches of Switzerland. Under this umbrella, it includes the Goldsmiths and Mappin & Webb retail brands. Buying a luxury watch seller is a fairly unusual choice given the state of the UK economy. But the company is going from strength to strength. In the six months to the end of October, online sales were up 65.4%. This helped to boost operating profit by 52.1% on the previous six months trading.
Turnaround potential
At the other end of the scale, Marshalls lost around 18% in value over the past 12 months. The FTSE 250 stock manufacturers landscaping products, ranging from block paving to drainage systems. The share price took a hit in Q2 last year, with job cuts announced due to a fall in demand. Pay cuts were taken along with an additional £90m credit funding obtained from different banks.
Now we’re in a fresh year. I feel the business can take advantage of a bounce in demand in the second half of 2021 as lockdown eases thanks to the vaccine. It’s already seen a 9% gain in the retail market in the second half of 2020. I think this sector will continue to grow due to the surge in DIY projects, making it a potential stock to buy for 2021.
The final stock I’d keep an eye on for 2021 is Capital & Counties. It’s a real-estate trust that owns a lot of prime central London venues. The lockdown has been hard on business, with half-year figures showing a large loss of £441.1m. At the same time, it has still been investing, with a large stake taken in a project around Covent Garden via Shaftesbury. I think that 2021 could see a strong bounce back in rental income and general retail performance, and so would buy the stock as a way to play on this theme.
