The FTSE 250 index has had a phenomenal run. It’s trading close to its all-time high. There are some great companies that make up this part of the stock market. So here are three FTSE 250 shares I’d buy in May 2021.
The online shopping boom has worked wonders for Royal Mail (LSE: RMG). The company has increased its revenue guidance for 2020/21 and I don’t think it’s a surprise that parcels volume has overtaken letters.
What’s also great is that Royal Mail is paying a one-off dividend to shareholders. The FTSE 250 company is expected to release its full-year results on 20 May. This is when it will be addressing its dividend policy. Perhaps this is a sign of good things to come?
Where the company once lagged on infrastructure, it’s now beefing up its resources with a parcels hub in the West Midlands. Royal Mail seems to be in a happier place with its unionised workforce than it once was as well. So for now, management and staff appear to be working with one another.
There are risks with the FTSE 250 stock, though. Will the parcels boom continue after the pandemic? And capital expenditure comes at a cost so this could impact Royal Mail’s profitability. But on balance, I’m impressed by its progress.
Greggs (LSE: GRG) posted its first-ever loss in March. But I’m not overly concerned by this. The company is a leading food-to-go retailer and I like that Greggs has a strong brand, while its products offer good value. I reckon even if economic conditions worsen after Covid-19, most consumers could afford the retailer’s products.
I think it’s worth noting that Greggs has stores across the UK in well diversified locations. The large store network adds up to over 2,000 shops. These include sites in city centres, transport links and retail parks. During the pandemic, the travel ban impacted certain sites. But as lockdown restrictions ease and some normality resumes, I reckon trading activity across the entire store estate should pick up.
The company is due to give an update on 13 May. I expect this to be positive for the FTSE 250 stock.
Greggs shares are expensive however, and are trading close to an all-time high. An increase in staff costs and ingredients could dampen profitability. The stock could also be sensitive to any further Covid-19 restrictions.
There’s been a lot of momentum behind Hammerson (LSE: HMSO) shares. The commercial property landlord was hit hard by the pandemic. But now that retail and hospitality is slowly reopening across the UK, I think things look promising for the company.
I recently commented on Hammerson’s operational and rent collection update. To me, this was encouraging.
As more people get their Covid-19 jabs, the quicker normality (or ‘new normality’) should return and footfall across Hammerson’s properties should rise. While it’s still early days, I reckon now is a great buying time for me to snap up some of these FTSE 250 shares.
The landlord’s recovery is highly dependent on the easing of government restrictions, of course. Any delay in vaccines or further coronavirus setbacks could hinder the share price.
But I’m optimistic that the worst is over and that Hammerson is on the road to recovery.
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Nadia Yaqub has no position in any of the companies 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.