Down 30%+! A falling FTSE 250 stock that looks dirt-cheap today

Choppiness on the London Stock Exchange has created a brilliant dip-buying environment for investors. Here’s a fallen FTSE 250 share on my radar.

| 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.

Woman using laptop and working from home

Image source: Getty Images

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.

Volatility on financial markets remains extreme as investors worry about on high inflation and a possible recession. Stock price weakness across the whole of the FTSE 250 illustrates the scale of risk aversion right now.

These are problems that a trader and a short-term investor needs to consider carefully. But as someone who invests for the long haul, I think the 2022 market downturn provides many excellent dip-buying opportunities for me.

Wizz Air Holdings (LSE: WIZZ) is one dirt-cheap UK company I’m considering buying today. It has endured a stock price drop of 35% in the past three months alone. I think it could deliver exceptional investor profits once strong economic growth returns.

Flying lower

2022 has been a nightmare for many UK airline stocks. Flight cancellations have ballooned as staff shortages have emerged. Indeed, Wizz Air reduced its summer capacity again this month in response to the crisis.

Meanwhile, fuel costs are soaring as the price of crude oil rockets. And fears over ticket sales are growing as consumers and businesses start to tighten the pursestrings.

What’s more, Wizz Air’s share price in particular has been badly hit following Russia’s invasion of Ukraine. With a focus on Central and Eastern Europe it is particularly susceptible to changing economic and geopolitical conditions in the region. Its operations in Ukraine remain closed, of course.

Having said all that, right now it still retains a bright long-term outlook. The emerging regions it concentrates on remain tipped for strong economic growth in the coming years. This could ignite demand for its low-cost plane tickets.

Robust regional growth

To illustrate that potential, take Poland and Romania as examples. These are by far the stock’s biggest markets by number of routes. The Polish economy has tripled in size over the past three decades. And, looking ahead, Romania’s could be on course to grow above the European average too. The European Commission has also tipped GDP growth of 3.6% in 2023, above the EU average of 2.3%.

A cheap FTSE 250 share

City analysts also think Wizz Air will bounce back into profits growth in financial 2024. This means the airline stock is now on a rock-bottom PE ratio of just 8.8 times. I think the company’s sinking share price represents a top dip-buying opportunity.

I don’t just like it because of its exposure to Central and Eastern Europe. It’s also expanding into other parts of the continent, a drive that boosts its opportunities in the fast-growing budget airline sector.

Analysts think the low-cost airline industry will be worth $440.5bn by 2030. That’s up almost threefold from the $115bn it was valued at in 2016. And I think Wizz Air could be one of the best ways for me as an investor to capitalise on this trend.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

I’m aiming for a million buying unexciting shares!

By investing regularly in long-established, proven and even rather dull businesses, this writer plans to aim for a million. Here's…

Read more »

Investing Articles

3 things to consider before you start investing

Our writer draws on his stock market experience to consider a few vital lessons he would use to start investing…

Read more »

Investing Articles

Will this lesser-known £28bn growth stock be joining the FTSE 100 soon?

As the powers that be plan a reorganisation of Footsie listing rules, this massive under-the-radar growth stock could find its…

Read more »

Investing Articles

Fools wouldn’t touch these 5 FTSE 350 flops with a bargepole – how come I own 3 of them?

Harvey Jones took a chance on three struggling FTSE 350 stocks in the hope that they'd stage a dramatic recovery.…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

How I’m trying to make a million from passive income

Invest as much as possible, regularly, and use the passive income to plough back into more shares. Here's how millionaires…

Read more »

Investing Articles

I’d buy 30,434 shares of this UK dividend stock to target £175 a month in passive income

A top insider has spent over £1m buying this 9%-yielding passive income share over the last year. Roland Head explains…

Read more »

Growth Shares

Should I buy Rolls-Royce shares for 2025?

Edward Sheldon’s missed out on the huge gains that Rolls-Royce shares have generated this year. But should he buy the…

Read more »

Investing Articles

30,000 shares in this FTSE 250 REIT could earn me £559 a month in passive income

Real estate investment trusts can be great passive income investments. And Stephen Wright likes one from the FTSE 250 with…

Read more »