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.

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 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

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

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

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

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

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »