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He FTSE 250 Index The stock index has performed quite poorly during the post-pandemic era. At around 20,294 points, today it is trading a huge 16% below the all-time highs it reached in August 2021.
The political and economic turbulence in Britain has been a drag on the country's second-largest stock index, which is hardly surprising: just over half of its cumulative profits come from these shores.
But as a long-term investor, I think grabbing a piece of the FTSE 250 today could be a good idea. Since its creation in 1992, it has generated an average annual return of 11%.
Buy cheap stocks
Past performance is no guarantee of future returns, but that impressive performance means that gaining exposure (through individual stock purchases, an index fund, or both) could be a wise investment strategy.
A clever way to do this could be to focus on buying cheap FTSE 250 shares. The theory is that undervalued companies can deliver market-beating returns when investors finally realize their pricing mistakes and push them up. It's a strategy that has proven lucrative for investors time and time again.
With that in mind, here are two very cheap stocks that I would consider buying in the coming days.
NCC Group
The rush to US tech stocks means many local competitors still look hugely cheap. This is the case with NCC Group (LSE:NCC), even after significant recent share price gains.
City analysts estimate that earnings here will rise by 54% this fiscal year (through May 2025). And that's why the company is trading on a forward growth price-to-earnings (PEG) ratio of 0.4.
A quick reminder: any reading below one suggests a stock is undervalued.
NCC, which makes cybersecurity products, has suffered as tough economic conditions have forced technology companies to cut spending. However, sales rebounded 6% at constant exchange rates in the second half of last year, compared with a 9.4% drop in the first half.
Could the company be at the start of a strong and sustained recovery? I think the odds are high, reflecting our increasingly digitalised lifestyle and the growing threat from cybercriminals. Buying its shares at current low prices could be a masterstroke.
Bank of Georgia
Investing in emerging markets can often involve a great deal of risk. This is certainly the case with Bank of Georgia Group (LSE:BGEO) today. Growing social unrest and political turbulence in Georgia pose a risk to earnings in cyclical companies like this.
But as with any stock, I have to weigh the potential rewards of owning Bank of Georgia against its risks. And overall, I think the stock has considerable investment potential, driven by growing demand for banking products.
The latest financial data showed adjusted pre-tax profit rose 22.5% between January and March. A combination of low product penetration in Georgia and a strong economy means there is also scope for profits to rise further.
What's more, I believe that the bank's very low valuation more than reflects the country's current problems. The company trades on a forward price-to-earnings (P/E) ratio of 3.5 times, which I believe provides a wide margin of error.
As investors are also offered a 7.1% dividend yield, I think Bank of Georgia could be one of the best offerings on the FTSE 250.
