2 FTSE 250 shares to buy now

The FTSE 250 index can be a great place to find lucrative investment opportunities. Here, Edward Sheldon highlights two shares in the index he’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.

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 can be a great place to find lucrative investment opportunities. This index, which contains the largest 250 stocks on the London Stock Exchange outside the FTSE 100, is home to some top companies.

Here, I’m going to highlight two FTSE 250 shares I’d buy right now. Both of these companies have strong momentum right now and their share prices are trending up.

A top FTSE 250 tech stock

One of my favourite stocks is Computacenter (LSE: CCC). It’s a leading provider of technology solutions to businesses and government organisations. Its customers include the likes of Heathrow Airport, Linklaters, and Costa Coffee.

Computacenter has a lot of momentum right now as it’s benefitting from the ‘digital transformation’ trend. In its full-year 2020 results, posted in mid-March, the group reported a 47% rise in pre-tax profit and a 50% rise in earnings per share.

More recently, CCC advised that in Q1 it had seen “strong demand” across the business, particularly for its Professional Services in the UK and Germany, and “significant revenue growth” in Technology Sourcing in the UK. Looking ahead, the company said that due to the strong recent performance, it expects 2021 to be a year of “good progress” in its reported profits.

One risk to the investment case here is that demand for IT services could slow, post Covid-19. If future growth is disappointing, the shares could experience weakness. With the stock trading on a reasonable price-to-earnings ratio of 20 however, I think the risk/reward position here is favourable. It’s worth noting that analysts at Citi recently raised their price target to 2,985p — 14% above the current share price.

This industry is booming

Another FTSE 250 share I’d buy today is Howden Joinery (LSE: HWDN). It’s the UK’s largest kitchen supplier. Currently, it has around 750 depots in the UK and around 30 in Continental Europe.

The UK home renovation industry is booming right now and Howdens is benefitting. This is illustrated in its recent trading update for the 16 weeks to 17 April. For the period, UK revenue was up 47.1% on the same period in 2020 and up 13.1% on the same period in 2019. In Europe, growth was even stronger. On a local currency basis, depot revenue in Continental Europe for the period was up 108% year-on-year, and up 38% on the figure in 2019.

Looking ahead, I think the outlook here remains favourable. Many Britons have saved a lot of money during lockdown and I expect plenty of this capital to go towards home renovations. Meanwhile, the group plans to open around 35 new depots in the UK and 11 in France during 2021, which should boost sales further. The company has said it remains confident the group is on track with its plans for the year.

One risk here is the cyclical nature of the industry. Sales can fall during periods of economic weakness. Another is the stock’s valuation. A forward-looking P/E of 23.9 probably doesn’t leave much room for error. Overall however, I think the long-term growth story here is attractive.

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.

Edward Sheldon owns shares in London Stock Exchange. The Motley Fool UK has recommended Howden Joinery Group. 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

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »

Investing Articles

£12K in savings? Here’s how I could turn that into £13K annual passive income

This Fool explains how investing a lump sum can help her build a passive income stream to enjoy in her…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s why Rolls-Royce shares are now set to fly over the £4 mark

Once again, Rolls-Royce shares are crushing the FTSE 100. Should I add to my holding of this stock at the…

Read more »

Investing Articles

1 under the radar FTSE 100 AI stock investors should consider buying

Our writer explains why this FTSE 100 pick could be a shrewd investment with its established experience of using AI…

Read more »

Investing Articles

Does the beaten-down Diageo share price make it a no-brainer buy?

Harvey Jones spent years waiting for the Diageo share price to look like good value, before finally buying it in…

Read more »