As the UK economy rebuilds after the coronavirus crisis, I’ve been looking for FTSE 250 stocks to add to my portfolio. Here are five companies I’d buy right now.
FTSE 250 shares to buy
The first stock on my list is drinks business Britvic. This company owns some of the most recognisable drinks brands in the UK. Therefore, I think its profits should return to growth as the UK economy reopens and consumer confidence improves.
The one major challenge the group could face as we advance is higher costs. These may hurt its growth in the next few months, and possibly years. However, it should be able to raise prices to offset higher costs.
As such, I would buy the company for my portfolio of FTSE 250 stocks.
Another recovery play I would buy in the FTSE 250 is Cineworld. When cinemas are eventually allowed to reopen at full capacity, this company should experience a recovery in profits and sales.
That said, this stock might not be suitable for all investors. The company has built up a tremendous amount of debt throughout the crisis, and it could be some time before profits return to 2019 levels. Nonetheless, I’d buy the stock for its recovery potential.
I’d also buy shares in FTSE 250 airline easyJet for the same reason. The company is a high-risk, high-reward investment. It could be years before the airline returns to 2019 levels of profitability. During that time, there’s no telling what could happen to the business.
Still, as a recovery play, I think easyJet’s well-known brand and reputation for low-cost, no-frills air travel will work in its favour. These are the primary reasons why I’d buy the stock for my portfolio today.
Domino’s Pizza is one company that seems to have prospered in the pandemic. Despite the economic lockdowns, the group’s underlying profit before tax rose to £101m last year, up from £99m in 2019.
I’ve always been impressed by its business model, which has helped the firm expand revenues by 40% in the past five years.
Past performance should never be used as a guide to future potential, but I think the group can maintain its growth trajectory. That’s why I’d buy the company for my portfolio of FTSE 250 stocks.
However, Domino’s is facing more and more competition, making it harder for the business to grow. I think that’s the main challenge facing the company today.
The final company I’d buy is Morgan Sindall. I think this construction business should benefit from increased economic activity in the UK, as well as the government’s massive infrastructure spending plans.
The main challenge it faces is the potential for higher costs, which could hit profit margins.
Construction is also a low-margin business, so any slowdown in sales could have a big effect on the group’s bottom line. However, despite these risks, I think the company is one of the best FTSE 250 stocks to play the UK economic recovery.
The post 5 FTSE 250 shares to buy today appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Britvic and Dominos Pizza. 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 2021