What’s the best mix of shares to put into a Stocks and Shares ISA? That depends on individual circumstances and investing strategies. My investing strategy these days is focused mainly on stocks paying progressive dividends. But I’m flexible, and I’m happy to add the occasional growth stock. I’m also open to both FTSE 100 shares and FTSE 250 shares.
Today I’m looking at a couple of FTSE 250 shares that I have on my shortlist. First up is Mediclinic International (LSE: MDC), which released a Q3 trading update Friday. The private healthcare company, with operations in the Middle East and Southern Africa, reported a 2.5% rise in Q3 revenue.
Coping with Covid-19
CEO Dr Ronnie van der Merwe said: “Through the third quarter of our financial year, a more severe second wave of Covid-19 cases has placed greater demand on our acute care capacity.” So far, Mediclinic says it has cared for more than 30,000 Covid-19 patients. And it’s heavily into supporting vaccine rollout plans.
What’s the investment proposition? After a tough few years, I see Mediclinic as a recovery candidate. I won’t buy into a recovery stock until I see signs of the actual recovery. And I think that’s even more important with potentially more volatile FTSE 250 shares. But I think I’m seeing it in 2021.
The company looks to be in a strong liquidity position, with cash and available facilities of £660m at December 2020. It’s reducing debt too. Cash conversion currently stands at 59%, which is well below the target of 90%-100%, but is better than the 42% rate in the first half. Will Mediclinic be one of the FTSE 250 shares I buy in 2021? I’m going to wait for the full-year picture at least, and possibly until I see further cash conversion improvement.
Exciting FTSE 250 shares?
When we think of FTSE 250 shares, we often think of more exciting companies with rapid growth prospects. Well, that doesn’t exactly describe my second pick, Ibstock (LSE: IBST). It makes bricks. And concrete construction items. Dull and boring? Maybe. But they’re essential products with strong long-term demand.
I say long term, as Ibstock has suffered in the Covid-19 pandemic. As the construction industry was severely hampered, the Ibstock share price was hammered in early 2020. It’s not alone in that respect among FTSE 250 shares, many of which have experienced scary volatility. Ibstock has made one of the bigger recoveries since the November market uptick though. But it’s still down 28% over the past 12 months.
I’m seeing resilience
The firm’s 2020 trading update is showing signs of improvement. The release, on Thursday, said: “The strong recovery in market conditions through the second half enabled the group to achieve revenues of around £315m for the full year, down by 23% compared with 2019, with second-half performance down by approximately 10% year-on-year.”
That’s still a tough year, and the new quarter could be hit by the latest lockdown. But I think it underscores the long-term demand for building products. Ibstock expects 2020 EBITDA a little above its previous guidance of £50m, which I find reassuring. I’ll wait and see what the results say. But these two FTSE 250 shares are definitely on my Stocks and Shares ISA shortlist.
