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2 FTSE 250 shares I’ll never sell

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Despite a brief rally over the last month, the FTSE 250 index is still down over 20% year-to-date. Some of its members have fared a lot worse.

Does this make me want to throw in the towel and sell my holdings? Not a bit of it! Quite the opposite, in fact.

Long-term hold

I have a fairly unhealthy obsession with food-on-the-go giant Greggs (LSE: GRG) and it’s not just because of my penchant for bacon rolls. Frankly, I can’t see myself selling my shares in what I regard as one of the best companies in the FTSE 250.

There are numerous attractions here. It’s got a solid brand and 2,200 stores across the UK. It’s shown itself to be adept at responding to changing tastes and diets by continually launching new products. The company also owns its supply chain.

Having said this, no investment is devoid of risk. As relatively cheap as its baked treats are, Greggs isn’t immune to the cost-of-living crisis. When funds are tight, some commuters will surely make breakfast/lunch at home, or even go without. The sustained popularity of working remotely, not to mention the rise and rise of online shopping, also means that people aren’t visiting the high street so often.

On a positive note, trading is proving resilient. Back in October, Greggs revealed total sales rose almost 15% in the 13 weeks to the beginning of that month. As a result (and despite the dodgy economic environment), there were no changes to full-year guidance. That’s good enough for this Fool!

Now I don’t expect shares in Greggs to explode in value when the economic clouds have passed. That’ll likely be the stocks hit hardest. Moreover, a price-to-earnings (P/E) ratio of 19 for 2023 isn’t exactly cheap.

However, I do believe it will continue to outperform the FTSE 250 over the long term.

Quality mid-cap

Fantasy figurine retailer Games Workshop (LSE: GAW) is another holding that I just can’t see myself selling, even if it isn’t immune from the tightening of purse strings either.

Only yesterday, the company said pre-tax profit for the last six months is expected to come in at no lower than £83m. That’s not bad, but it’s down from just over £88m in 2021.

This isn’t a massive surprise. As devoted as its fans are, shelling out for new sets probably won’t rank higher up the list than paying energy bills or putting food on the table.

So, yes, I can see why the shares have dropped almost 30% in 2022 alone.

But an earnings wobble or two isn’t enough to put me off. Indeed, Games still has many of the ‘quality’ hallmarks I’m looking for. A record of consistently high returns on capital? Check. Solid financial position? Check. A leader in a niche market that new entrants will struggle to gain a foothold in? Check. A dividend stream to reinvest when the share price (temporarily) softens? Check. Strong IP and a range of options to exploit it? Check again.

All this makes a P/E of 19 look like good value, at least in my book.

The markets will do what they do in 2023. But Greggs and Games Workshop won’t be leaving my portfolio.

Actually, I’m tempted to buy more of both.

The post 2 FTSE 250 shares I’ll never sell appeared first on The Motley Fool UK.

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Paul Summers owns shares in Greggs plc and Games Workshop Group plc. The Motley Fool UK has recommended Games Workshop Group Plc. 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.

Motley Fool UK 2022