3 FTSE 250 recovery stocks I’d buy now to get rich and retire early

I think these three FTSE 250 recovery stocks are strong candidates to deliver high returns. They’re among my best shares to buy now.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The three FTSE 250 stocks I’m looking at today are currently out of favour with investors. They’re among my best shares to buy now, because I believe they’re capable of delivering high returns on a recovery from their current levels. Indeed, I reckon they could help me get rich and retire early.

My three FTSE 250 recovery stocks

None of the three businesses are firing on all cylinders right now. All have endured a Covid-19 impact, or other issues, or both. Of course, it’s because there’s a lack of immediate momentum in these businesses that many investors are overlooking them. I think this is short-sighted.

The companies in question are soft drinks firm Britvic (LSE: BVIC), gold miner Centamin (LSE: CEY), and medical products group ConvaTec (LSE: CTEC).

Covid-19 setback

Britvic’s shares reached a high of 1,068p last autumn. They’re currently 30% below that, at 747p.

The company performed strongly last year, with its earnings and dividend increasing by mid-single-digit percentages. Management said: “We fully expect that we will make further progress in 2020”.

The Covid-19 pandemic put paid to that. Big declines in out-of-home consumption have been only partly offset by strong growth in at-home consumption. Analysts expect a 28% fall in earnings, and a similarly reduced dividend.

However, the CEO has said: “Looking further ahead, I am confident that the strong momentum we built up going into the pandemic will return”. I share his confidence.

A healthy bounce-back in earnings and dividends is forecast for fiscal 2021. Trading at 13.9 times the forecast earnings, with a prospective dividend yield of 3.8%, I see this drinks-brands powerhouse as a compelling FTSE 250 recovery stock.

Production setback

Centamin’s business and shares were performing strongly earlier this year. On the back of a higher gold price and production, it reported a 57% increase in first-half revenue and a 280% rise in earnings. Its shares reached a high of 232p in August.

However, last month it announced it was deferring production in one zone of its giant Sukari mine in Egypt. This was due to movement in a localised area of waste material. Subsequently, it revised its 2020 production guidance down to 445,000–455,000 from 510,000–525,000 ounces. Furthermore, it gave 2021 guidance of 400,000–430,000 ounces.

At a current 126p, this FTSE 250 miner’s shares are 46% below their August high. I think the fall is way overdone. At less than 12 times forecast 2021 earnings, and a prospective dividend yield of 6%, I reckon Centamin is another stock capable of delivering high returns for buyers today.

FTSE 250 recovery stock #3

Ahead of the February/March market crash, ConvaTec’s shares were up at 220p. By May, they’d recovered to the same level. However, they’ve since drifted lower, and at a current 195p are 11% off their highs.

The company has a market-leading portfolio of medical devices and technologies for the management of chronic conditions. Demographic trends are supportive for growth, but the company hadn’t really been making the most of its strong position, and there were wholesale management changes last year.

The Covid-19 has had some adverse impact on ConvaTec’s progress under the new management. However, I believe the team’s strategy for the business, the structural backdrop for growth, and a sub-20 multiple of forecast 2021 earnings make this another compelling FTSE 250 recovery stock.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Britvic. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Road trip. Father and son travelling together by car
Investing Articles

A 10% dividend yield? There could be significant potential here to earn a second income

Mark Hartley delves into the finances and performance of one of the top-earning dividend stocks in his second income portfolio.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Charlie Munger recommended shares in this growth company back in 2022. Here’s what’s happened since

One of Charlie Munger’s key insights is that a high P/E ratio shouldn’t put investors off buying shares if the…

Read more »

Investing Articles

What might 2025 have in store for the Aviva share price? Let’s ask the experts

After a rocky five years, the Aviva share price has inched up in 2024. And City forecasters reckon we could…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Trading around an 11-year high, is Tesco’s share price still significantly undervalued?

Although Tesco’s share price has risen a lot in the past few years, it could still have significant value left…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£11,000 in savings? Investors could consider targeting £5,979 a year of passive income with this FTSE 250 high-yield gem!

This FTSE 250 firm currently delivers a yield of more than double the index’s average, which could generate very sizeable…

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

Does a 9.7% yield and a P/E under 10 make the Legal & General share price a no-brainer?

With a very high dividend yield and a falling P/E forecast, could the Legal & General share price really be…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

This growth stock is up 2,564% over 6 months! Is this FOMO?

This growth stock has experienced an incredible appreciation in its share price. It’s not a meme stock, but investors might…

Read more »

Investing Articles

This bank’s dividend yield will grow to 6.9% in 2026! And analysts say its undervalued

Analysts say this FTSE 100 stock’s dividend yield will continue to rise over the medium term. With the stock also…

Read more »