3 FTSE 250 stocks to buy before August

The FTSE 250 (INDEXFTSE:MCX) index has done well over the past year. Paul Summers thinks these stocks could push it higher.

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The FTSE 250 index is up 31% over the last year as the UK economy has gradually recovered from the Covid-19 pandemic. Although devoid of a crystal ball, I suspect some of its higher-quality constituents may further contribute to this rebound in August. Here are three I’d be happy to buy in advance of next month.

Powering on

Having once owned the stock, XP Power‘s (LSE: XPP) progress has served to remind me that it’s often a good idea to really run your winners. As I type, the stock’s up 35% in 12months. While some of this will be due to the wider market recovery, investors have clearly been cheered by the company boasting of a “strong order book.”

Created with Highcharts 11.4.3XP Power PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

XP Power’s shares traded on 27 times forecast earnings on Friday. That’s hardly cheap considering rising Covid infection rates. Foreign exchange movements could also prove a drag for the mid-cap.

Should you invest £1,000 in Dunelm right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Dunelm made the list?

See the 6 stocks

To quote Warren Buffett however, I’d rather buy “a wonderful company at a fair price than a fair company at a wonderful price.” XP is a leading manufacturer of critical power control components for the electronics industry. Once onboard, its customers rarely look elsewhere. 

So long as I wasn’t attempting to move in and out of the stock quickly (which isn’t the Foolish way), I’d have no issue buying some XPP shares before half-year numbers on 2 August.

A quality FTSE 250 stock

As a holder of the stock already, I’ll also be paying close attention to FTSE 250 member Greggs (LSE: GRG) next month. It reveals interim results to the market on 3 August.

The question isn’t whether Greggs is a great company. It’s got a strong brand, good leadership and has shown an ability to tap into emerging trends (vegan food) before others. Pandemic aside, returns on capital have long been great. 

No, the question is whether 27 times earnings is a reasonable price to pay now. Assuming Greggs has benefitted from more people hitting the road for staycations this year, I think it might be. Growth in retail sales over May and June also bodes well. 

Sure, the time to really pile into Greggs was last September. And yes, buying now is risky if the Delta variant really gets out of control. Notwithstanding this, I’d still buy into any weakness. The long-term outlook remains solid. 

Created with Highcharts 11.4.3Greggs Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Strong growth ahead

My final pick is real estate investment trust Tritax Big Box (LSE: BBOX). I’d be seriously amazed if next month’s interim results (5 August) weren’t decent. After all, multiple lockdowns and the subsequent explosion in online retail have pushed demand for warehousing through the roof. 

None of this has escaped the market’s attention. BBOX shares are up 38% since this time last year. As a result, shares in this FTSE 250 member now trade at a steep premium to their net asset value (the value of Tritax’s property minus its liabilities). Some might think now’s a risky time to buy.

Created with Highcharts 11.4.3Tritax Big Box REIT Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But let’s be frank. Demand for BBOX’s buildings won’t disappear. In fact, I think we’re still in the early stages as far as online shopping is concerned.

On balance, I’d be happy to buy Tritax today to secure the dividend stream, However, I’d also be comfortable adding to my position if the share price subsequently lets off steam. 

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Dunelm right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Dunelm made the list?

See the 6 stocks

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.

Paul Summers owns shares in Greggs. The Motley Fool UK has recommended Tritax Big Box REIT and XP Power. 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.

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