Looking to make a mint from the FTSE 250? Well, I am convinced that following these three investment tips could help you generate giant returns from the index.
Buy the housebuilders
In a recent article I championed the terrific housebuilders that currently sit in the FTSE 100. But Britain’s second-tier share index isn’t exactly short of hot construction stocks of its own.
Countryside Properties, for example, announced earlier this week that it continues to see “robust demand for our homes,” and that as a consequence its forward order book was up 16% year-on-year as of the close of June, at £409m.
Helped by the recent acquisition of Westleigh Homes that should help it continue plugging Britain’s colossal housing gap, earnings would appear on course to surge. Despite this bright outlook (for the near term and beyond) Countryside is much too cheap in my opinion, the firm carrying a mere forward P/E ratio of 9.4 times.
The same can be said for Redrow and Bellway, to name just a couple of other brilliant builders — the latter advised at the start of June that its order book was up 7.8% year-on-year as of June, for example. These shares sport low earnings multiples of 6.7 times and 7 times respectively.
Another great way to capitalise on the UK’s housing crunch would be to buy Ibstock, a share that I own myself. The brick manufacturer is in great shape to capitalise on the positive outlook for homebuilding activity, yet it can be picked up an undemanding forward P/E ratio of 13.5 times.
Follow the flying aces
The newsflow over at Wizz Air might have been a little mixed of late, but I remain convinced that the long-term profits outlook at the Hungarian flyer remains compelling.
While profits dipped 14% during the three months to June, to €50m, this was due to a colossal rise in flight cancellations related to air traffic control strikes in Europe. I was more interested in news that both revenues and passenger numbers at Wizz Air continued to grow by double-digit percentages, reflecting the airline’s busy expansion strategy and the rising economic might of its core markets of Central and Eastern Europe.
BBA Aviation is another share I am tipping for great things thanks to its wide base of operations across the US, boosted by the recent acquisition of EPIC Fuels which expanded its fixed-base operator locations to 400, as well as buoyant business jet traffic.
BBA might be a tad more expensive than Wizz Air, the firm sporting a forward P/E ratio of 18.1 times versus the airline’s 14.9 times. But this makes it no less of a brilliant buy.
Snap up these screen stars
I recently lauded the investment case of cinema operator Cineworld, a firm that merits a higher rating than its prospective P/E ratio of 13.6 times suggests.
Another film star from the FTSE 250 that I’m tipping for big things is Entertainment One. The company’s television shows like Peppa Pig are already driving solid revenue growth and it is making big changes to improve its film division, something which the acquisition of Sierra Pictures this month will bolster. And like Cineworld, the business sports a very attractive valuation, a forward earnings multiple of 15 times.