It’s easy to grumble about the FTSE 250 right now. The domestically-focused index is down 5% or so in 2023 so far, as multiple headwinds hit the UK economy.
Look a little deeper however, and it becomes clear that some of its members have been doing just fine, thank you very much.
Good times ahead?
I remain confident that Moneysupermarket.com (LSE: MONY) shares could register excellent gains in 2023. They’re already up 35% so far.
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Much of my bullishness stems from the fact that energy prices have been falling. That should make this market more competitive again, pushing more people to search around for better deals via the company’s price comparison site.
So I’m expecting the next few updates from this FTSE 250 member to be pretty positive, at least in terms of the outlook. Speaking of which, interim results are due on 24 July.
Of course, it’s quite possible that energy-switching activity takes longer to get going than first thought. One thing that can’t be ignored is that Moneysupermarket operates in a pretty competitive space. So while I’m happy to remain invested here, I’m also not complacent.
Still, a price-to-earnings (P/E) ratio of nearly 18 looks reasonable when the chunky 4.5% dividend yield and high returns generated on the money management put to work are taken into account.
Big recovery
A second constituent that’s grabbing my attention these days is pub firm JD Wetherspoon (LSE: JDW). Its shares have climbed 46% year-to-date as the company has reported increasingly positive sales momentum.
In fact, JD predicted in May it would achieve record full-year sales and that annual profit would come in near the top end of analyst expectations.
Given the hot conditions we’ve had in the UK so far this summer, I’m inclined to think this is now even more likely. And that could mean more gains ahead for investors.
While JD appears to have stolen the march on rivals in terms of recovering from the pandemic however, margins are wafer thin (in contrast to Moneysupermarket.com). The higher labour, energy and food costs seen lately can’t be helping matters.
In my opinion, this makes a P/E of 18 for FY24 less attractive in this instance.
As such, I’m not considering an investment in ‘Spoons’ today.
Long-term loser
As good as recent gains have been for the aforementioned companies, they both pale into insignificance compared to the performance of luxury car firm Aston Martin Lagonda (LSE: AML).
Quite frankly, a 115% jump in the share price of any company since the beginning of the year isn’t to be sniffed at.
Reasons for this include a smaller pre-tax loss in Q1, robust sales of its sport utility DBX model and investment from Chinese automotive group Geely. A recent agreement with Lucid Group to manufacture electric vehicles has provided a further boost.
But, once more, I’m not thinking of buying in. The fact is, Aston Martin Lagonda has been an absolute dog of an investment since listing in 2018, down to persistent concerns over its financial viability. A track record of multiple bankruptcies was never likely to inspire confidence.
Personally, I’d rather own a slice of a company that has consistently shown itself to be capable of growing my wealth slowly but surely.
