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2 top FTSE 250 stocks I’d buy for an uncertain 2023

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Young Caucasian woman with pink her studying from her laptop screen

2023 is shaping up to be another turbulent year for stock markets. Things could be particularly choppy on the FTSE 250 too given the murky outlook for Britain’s economy.

The London Stock Exchange’s second-tier index is packed with shares that generate all or most of their profits from these shores. But there are still top stocks here that I’m thinking of snapping up for next year.

Here are two FTSE 250 stocks I’d buy with cash to invest. I expect them to trade strongly regardless of the economic landscape.

Premier Foods

Premier Foods’ (LSE: PFD) share price offers excellent value on paper. Today it trades on a forward price-to-earnings (P/E) ratio of just 9.4 times.

This looks particularly good value following Wednesday’s bright financial update. Revenues rose 6.2% in the 26 weeks to 1 October, the company said. And adjusted pre-tax profit rose 11.9% from a year earlier.

Premier Foods has two formidable weapons that help it to thrive in tough times. Firstly, the brand strength of products like Mr Kipling cakes and Bisto gravy mean they remain essential buys even during tough times.

These popular labels also give the business room to pass on cost increases without having to worry about slumping volumes, thus providing profits with extra protection.

Secondly, Premier Foods makes a wide range of cheap foods like instant noodles and packet soups. With inflation tipped to remain high and economic conditions difficult, sales of these products should remain strong in 2023.

These qualities are valuable to me as an investor. But they’re not the only reason I’d buy this share today. I’m also encouraged by the excellent progress the firm is making to build its international business.

The company also operates in Ireland, Australia, North America and mainland Europe. Sales in these territories jumped 11% in the first half as brand-building initiatives continued.

Competitive pressures in the food industry are huge. So the business will have to keep investing heavily in brands to defend its market share. But I think Premier Foods’ rock-bottom share price reflects this threat to its profits.

Greencoat UK Wind

I think purchasing UK energy stocks is another good idea during tough economic periods. Electricity is one of life’s essential commodities, so businesses like Greencoat Renewables (LSE: GRP) can expect profits to remain stable next year.

As the name suggests, this FTSE 250 stock is focused on the low-carbon energy market. This is particularly appealing to me as a long-term investor. Demand for renewable power is tipped to soar over the next decade as the world transitions from fossil fuels.

Greencoat Renewables owns solar and wind farms in Ireland, Spain, France and Scandinavia. This broad footprint provides an added layer of protection for investors. Poor weather conditions affecting one or two of its territories aren’t fatal to profits at group level.

Running renewable energy assets can be a very expensive business. And unexpected costs (for example due to extreme weather) often take a bite out of profits.

Still, this is a risk I’d happily accept given Greencoat Renewables’ ultra-cheap share price. It trades on a P/E ratio of 11 times for 2023. The business also carries a meaty 5.4% dividend yield.

The post 2 top FTSE 250 stocks I’d buy for an uncertain 2023 appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares 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.

Motley Fool UK 2022