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I’m drawing up a list of top FTSE 250 shares to buy when I next have cash to invest. Here are four on my watchlist today.
Grainger
Rents in Britain are rising at breakneck pace as the country’s property shortage drags on. According to estate agency Hampton’s, annual rental growth on newly let properties hit record highs of 12% last month.
I could enter the buy-to-let market to capitalise on this, but high costs and recent tax changes make this unattractive to me. I’d rather play the residential rentals market by buying shares in Grainger, the UK’s largest-listed landlord.
This allows me to reduce risk (the FTSE 250 firm owns around 10,000 properties). It also enables me to get exposure to the market without having to endure elevated up-front costs. I’d buy Grainger shares even though cost inflation is affecting the firm’s profit margins.
Babcock International
Defence companies like Babcock International are thriving following Russia’s invasion of Ukraine last year. Organic revenues here leapt 10% during the 12 months to March, to £4.4bn.
The international community remains very publicly committed to continue raising arms spending, too. Sweden plans to rise expenditure by 28% as it seeks to join the NATO bloc, it announced this week. And in August, Japan’s defence department submitted a record 7.7trn yen budget request amid deepening tensions with China.
Project delays could cause an unexpected hit to profits. But I still expect Babcock to deliver excellent long-term returns to shareholders.
Centamin
I’m looking for ways to de-risk my investment portfolio, so gold miner Centamin is another FTSE 250 share on my shopping list.
Precious metals tend to rise in value during tough times, so owning companies like this could be a great way for me to reduce risk. That’s even though mining is complex business, where production issues can be common that drive up costs and decimate revenues forecasts.
Centamin is on course to increase capacity at its flagship Sukari mine to 500,000 ounces a year by 2024. Recent pre-feasibility work at its Doropo mine in Côte d’Ivoire is also highly encouraging (this revealed possible production of 173,000 ounces per year over the 10-year life of the mine). I think it’s a top gold stock right now.
Greggs
Buying retail stocks is dangerous business as the cost-of-living crisis continues. But Greggs seems to have the right recipe to continue thriving (like-for-like sales rocketed 16% in the six months to June).
The teas, sausage rolls, and doughnuts it sells are British staples, and they are cheap. This makes them massively popular during all points of the economic cycle. On top of this, massive investment in its wide menu also continues to yield big rewards for the company.
Greggs is expanding rapidly too to capitalise on recent strong performances, with 50 net store openings to take its estate to 2,378 shops. It also continues investing heavily in its highly successful online operation. I think it’s a top buy for these tough times.
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