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Today I’m hunting through the FTSE 250 mid-cap index to buy stocks on offer. I have restricted my search to companies trading within 10% of their 52-week lows.
I’ll start with a word of warning. These unwanted companies are sometimes cheap for good reason. But I’ve often found good buying opportunities by looking for underperforming companies facing manageable short-term problems. Here are three stocks I would buy today.
Opportunity for long-term growth
my first choice is spiritual communications (LSE: SPT). This technology company specializes in the production of equipment used by network operators for testing and service assurance. Customers include mobile network operators and large data center operators such as Amazon Web services.
Spirent’s share price soared in January when the company warned that some customers had delayed their buying decisions. Although there were no cancellations, some earnings were expected to be delayed until the second half of 2023.
When earnings are unexpectedly weighted into the second half of the year, it’s sometimes a warning of trouble ahead. Initial delays could turn into cancellations, affecting earnings.
However, in a medium-term perspective, I think increasingly large and complex networks are likely to support Spirent’s continued growth.
The stock’s forecast price-earnings ratio of 15 doesn’t sound expensive to me, given the company’s high profit margins and debt-free balance sheet. I see Spirent as a long-term purchase.
A buy-and-forget action?
consumer goods company Cussons PZ (LSE: PZC) owns brands such as Carex, imperial leatherand Saint Tropez. This 139 year old group is still under family control and is also a member of my own stock portfolio.
PZ Cussons’ share price plunged recently after the company warned of continued cost pressures and a higher tax charge expected this year. However, the group’s pre-tax profit forecast for the year has not changed. In general, I don’t see much to worry about here.
The main risk I can see is that CEO Jonathan Myers’ efforts to drive growth in this business will not succeed. Although performance has improved since Myers took over, earnings are still lower than 10 years ago.
I am personally encouraged by the changes Myers has made so far. There are no guarantees, but I see this as a fairly low risk investment at current levels.
a strong recovery
irish firm C&C Group (LSE: CCR) owns the bulmers, magnifiersand de Tennent cider and beer brands, as well as a number of other smaller labels. C&C is also a UK distributor supplying the trade with a wide range of beverages.
The company had a tough pandemic, as pub closures hit commerce hard. But this business seems to be picking up pretty well. Revenue increased 20% during the key month of December compared to the previous year. Operating profit for the year to February 28 is now expected to be close to 2019 levels.
C&C’s debt has now fallen back to more comfortable levels and city analysts expect the company to restart dividend payments this year. Although there is a risk that bar sales will weaken during a recession, I think the stock appears to be reasonably valued at 11 times forecast earnings.
As with PZ Cussons, I view C&C as a buy-and-hold stock that could deliver attractive returns from current levels.
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