If I had to choose between investing in FTSE 100 shares or FTSE 250 ones, today I would choose the latter.
The reasons are simple.
Many FTSE 250 constituent companies are those for whom the UK market is an important one. The recent announcement of the lifting in lockdown is UK-specific. I think this will give them a boost.
Besides this the Brexit resolution and continuation of supportive government policies already goes in their favour.
Here are six FTSE 250 stocks I’d consider buying (if I have not already), split into three segments.
#1. Travel stocks get a green light
2020 has been an awful year for coach operators like National Express (NEX) and airlines like easyJet (EZJ). Their operations came to a standstill, costs mounted, financials suffered and share prices tanked.
All of that has already started changing though. The NEX share price has doubled since November, and EZJ is talking about booming demand now.
There are still risks to these stocks, with their financial health having suffered and the economy not yet out of the doldrums, but their prospects look better than they have in a while.
#2. Property markets strong
An economic slowdown often spells bad news for property markets, but not this one. House prices have been strong as the government extended support to real estate developers.
I reckon they will remain strong as well. There are two reasons for this – one, conditions will normalise soon making it easier to plan and make purchases and sales, and two, government support will continue.
I like two FTSE 250 home-builders. One is the Vistry Group, which released a bullish trading update recently. The other is Bellway, which is also buoyant about 2021 going by its forward order book.
Like travel stocks, here too, there are risks, albeit less so.
We do not know what happens once government support is withdrawn. The economic pickup could be slow, which means that property markets could slump.
#3. FTSE 250 retail to make a comeback
Retailers have also been impacted by the corona-crisis, though in many cases they have amped up their online sales. With customers more comfortable buying products online now and stores due to open in April, retail may have a double-win at their hands.
One retailer that can gain is the FTSE 250 greeting card and gift supplier Card Factory. Its share price has run up quite a bit in the past few days and I think it can make bigger gains in the near future.
Dunelm Group, the homeware retailer, is another stock that I think can benefit. Its share price performance has already been robust over the past year and its financials are strong too. With customers back in retail shops, I reckon it can strengthen its position even more.
Like all the stocks mentioned earlier, retailers too run the risk of the lockdown-lifting plan going awry. There is also the likelihood of the economy being in slowdown mode. But the odds are in their favour.