I’d buy these FTSE 250 stocks and hold them for a decade

This Fools thinks buying FTSE 250 stocks is a great way to build wealth. Here are two he’d buy today and hold for the long run.

| 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.

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.

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.

With March fast approaching, I’m keen to continue buying FTSE 250 stocks. Offering great growth opportunities, the plan is to buy them today for an attractive price and hold for at least a decade.

The average return of the index since the early 1990s is a whopping 11%. Of course, I’m aware that past performance is no indication of future returns, but I’m confident these two shares can thrive moving forward.

Wargames leader

Of the stocks I currently own, one of my favourites is Games Workshop (LSE: GAW). That’s because I’m so bullish on the long-term outlook for the business.

One reason for that is the grip it has on the miniature wargames market. When it comes to competition, it doesn’t really have any.

It also provides stable passive income through its 4.5% dividend yield. And while dividends are never guaranteed, the fact Games Workshop only uses “truly surplus cash” to pay its shareholders provides me with confidence. In the last 10 years, its dividend has experienced major growth.  

With a price-to-earnings (P/E) ratio of 23, there’s an argument to be made that the stock is expensive. While it doesn’t have much competition at the moment, I’d expect that to ramp up in the years ahead as the market becomes increasingly lucrative.

However, I’d argue that I’m paying for quality. And to offset threats such as rising competition, the business has diversified, most recently seen by its latest deal with Amazon to turn its Warhammer brand into a string of films and TV content.

TV stalwart

I’ve also been watching ITV (LSE: ITV) closely. Unlike Games Workshop, which operates in an industry rising in popularity, ITV is the opposite.

Its advertising revenues have taken a hit in the last few years. Given recent trends, it’s evident traditional advertising may no longer be the thriving industry it once was. As such, its share price has fallen drastically.

But I’m not giving up on ITV just because of that. And with a P/E ratio of 8.5, I see now as a smart time to swoop in and buy some shares.

At its cheap price, the stock yields an impressive 8.6%. That’s way above the FTSE 250 average of 3.4%.

What’s more, ITV is undergoing a strategic transformation that will put more emphasis on its Studios and Digital revenues. For example, it has invested in its online streaming platform ITVX, which helped its digital revenue jump by 24% in the first half of 2023.

ITV Studios also saw its revenue rise by 8% to £1bn. The business expects ITV Studios to “deliver total organic revenue growth of at least 5% per annum on average to 2026”.

Buy and hold

At their current prices, I think both of these stocks have the potential to provide me with some healthy gains in the next decade.

With Games Workshop, I’m excited to see where it’ll take its licensing business in the years ahead. For ITV, I’m bullish on the long-term outlook of its digital strategic transformation.

With any investable cash, I’m keen to pick up both.

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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Charlie Keough has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Amazon, Games Workshop Group Plc, and ITV. 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

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »