The FTSE 250 index has been a far bigger gainer today than the FTSE 100 index. While FTSE 250 is up 1.3%, FTSE 100 has barely moved from yesterday’s close.
I think there is a good reason for this.
Why the FTSE 250 index is ahead
As the reality of a phased end to the UK lockdown seeps in, investors are probably getting bullish about companies that rely on the market. FTSE 100 constituent companies, with some exceptions, are far more globalised by comparison. This means that they will be less positively impacted when the lockdown ends than FTSE 250 companies.
A number of FTSE 250 companies and their shares were doing quite well even earlier. I have talked about shares like Derwent London, Marshalls, and Segro in the past in this vein. But there are others that I’d consider buying in 2021 as well. Like these two.
#1. Vistry Group: growing profits
In its last trading update in January, Vistry Group (LSE: VTY) was bullish. For the financial year 2020, it expects to report a profit before tax of £140m. Any profit is notable in any case for 2020, in my view. We will know the exact number when it releases results next week.
But what really caught my eye is its outlook for 2021, where it expects profits to more than double from 2020. This estimate is based on its forward sales position.
The Vistry share price has already rallied sharply since November. But it is still far below the pre-pandemic levels. I reckon that as good numbers start rolling in for 2021, its share price will pick up.
Besides this, the FTSE 250 company has also decided to resume dividends. At the time it suspended dividends, it had a yield of 4.7%, which makes it attractive in any case.
There are risks to the Vistry share price, though. The real estate market has got a big boost from the stamp duty waiver, which is due to end soon. However, Vistry is confident of performing even when the scheme is withdrawn.
I think we will only really know how the property markets are doing after lockdown and the withdrawal of supportive government schemes. I’d keep this risk in mind before buying.
#2. Card Factory: share price rally
The FTSE 250 stock Card Factory (LSE: CARD) is the biggest gainer in today’s trading as I write, with an almost 10% jump in its share price. The retailer of greeting cards, gifts, and party supplies has most likely seen a jump in share price on hopes that it will be able to reopen stores from April 12, as per the latest government guidance.
Its revenues were growing pre-pandemic and it was also profitable. Even in 2020 its online sales have seen an impressive 137% increase. This makes me hopeful that it can bounce back in the next few months, which could positively impact the Card Factory share price.
The risk here is that the economy may still be in a slowdown over 2021, and cards, at the end of the day, are non-essential items. So as an investor I may have to wait a while before my capital gives a healthy return.
