3 FTSE 250 stocks I’d buy in May

The FTSE 250 index has been making headlines lately. Here are three companies that are members of the index that I’d buy today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Royal Mail

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

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.

Hammerson

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »