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LSE’s broader equity benchmark index, the FTSE 250 index ended higher by 265.47 points or 1.66 per cent at 16,247.94 on 7th May 2020. The index has lost nearly 25 per cent in the last three months primarily due to the meltdown caused by the pandemic. With panic-stricken investors exercising selloffs, and the companies slashing dividends becoming regular headlines in the light of Covid-19 outbreak, investors started losing faith in the equity markets. But if we look into the fact, then it’s not the first time that the markets have witnessed such a severe slump, but in the last three decades, the world markets have witnessed major corrections in the form of the Global Financial crisis in 2008, the Dot Com Bubble (2000), the Asian Currency crisis in the late 90’s and many others. The trend suggests that the investors who remain calm throughout these turbulences have made significant gains.
Gains in equity can be in the form of capital appreciation and dividend yields, which are both desirable for investors. While most of the investors are disappointed after seeing their wealth getting eroded in the period of global turmoil induced by the novel coronavirus, there are others who believe that this is an ideal time to invest in equity as an asset class or related instruments as the market has seen a steep correction. However, it is always advisable to seek professional guidance or do market research diligently before investing.
FTSE 250 stocks is a clear reflection of UK’s domestic economy. As the British economy seems to have revived from the uncertainties after Brexit and general elections, and UK has passed its peak amid the coronavirus scenario, investing in FTSE 250 companies could help in diversifying the portfolio. Additionally, as the free trade negotiations with the United States is underway, the United Kingdom is likely to become an investment destination over the years. Moreover, the British government is devising plans for the gradual easing of lockdowns with sector-specific safety guidelines. Let us mull over top FTSE 250 stocks, ranked in terms of their market capitalisation. These FTSE 250 listed stocks even if they have slashed or deferred their dividend pay-outs, are fundamentally strong.
- Avast Plc
The Software provider, Avast Plc (LON:AVST) is a London, the United Kingdom based technology company that is engaged in the provision of cyber-security solutions and other security software. The total M-Cap (market capitalisation) of the company at the market close on 7th May, stood at £ 4,838.45 million along with an annual dividend yield of 2.47 per cent. In the last three-month period, the company has generated a price return of 3.3 per cent. The company has generated a price return of 51.56 per cent in last one year. On 7th May 2020, after the market close, Avast Plc shares were 0.38 per cent up against its previous day closing price at GBX 475.
According to the year-end roundup of 2019, the FTSE 250 listed company’s Adjusted Revenue recorded an organic growth rate of 9.1 per cent, stood at $873.1 million. With organic growth of 10.2 per cent, the company’s Adjusted Billings rose to $911 million. The company exhibited stronger cash generation with unlevered Free Cash Flow up by 7.9 per cent to $424.6 million. The company’s annual dividend was up by 8.1 per cent to 14.7 cents per share.
GVC Holdings Plc
GVC Holdings Plc (LON:GVC) owns some of the leading brands in the gaming industry and is one of the largest sports-betting and gaming groups in the world. The total M-Cap (market capitalisation) of the company after the market close on 7th May, stood at £4,365.93 million along with an annual dividend yield of 2.2 per cent. In the last three-month period, the FTSE 250 listed company has generated a negative price return of 10.8 per cent. However, the company has generated a price return of 32.22 per cent in last one year. On 7th May 2020, at the market close, GVC Holdings Plc shares were 5.82 per cent up against its previous day closing price at GBX 792.80.
According to the year-end roundup of 2019, the FTSE 250 listed company’s reported revenue was up by nearly 23 per cent to GBP 3,600.5 million. The annual dividend increased to 35.2 pence per share during the period.
- ConvaTec Group Plc
Healthcare company, ConvaTec Group Plc (LON:CTEC) is a technologies and medical products company with a global footprint. The total M-Cap (market capitalisation) of the company on 7th May, stood at £ 4,300.26 million along with an annual dividend yield of 2.2 per cent. In the last three-month period, the company has generated a price return of 1.83 per cent. The company has generated a price return of 49.72 per cent in last one year. On 7th May 2020, after the market close, GVC Holdings Plc shares were 0.28 per cent down against its previous day closing price at GBX 216.20.
According to the audited results for 2019, the FTSE 250 listed company’s revenue was up by nearly 2.3 per cent on an organic basis to USD 1,827 million. The annual dividend stood at 5.7 cents per share during the period.
- HomeServe Plc
Consumer Services company, HomeServe Plc (LON:HSV) is engaged in the business of providing home emergency and convenience services like repair, heating, and installation services. The total M-Cap (market capitalisation) of the FTSE 250 quoted stock after the market close on 7th May, stood at £ 3,738.09 million along with an annual dividend yield of 1.9 per cent. In the last three-month period, the company has generated a negative price return of 13.17 per cent. However, the company has generated a price return of 7.29 per cent in last one year. On 7th May 2020, HomeServe Plc shares were 2.69 per cent up against its previous day closing price at GBX 1,147.
The company’s revenue grew by 13 per cent to GBP 457.7 million in the first half of the fiscal year 2020. The interim dividend of the company was up by 12 per cent to 5.8 pence during the period.
- Direct Line Insurance Group Plc
The FTSE 250, financial services company, Direct Line Insurance Group Plc (LON:DLG), deals in general insurance. The total M-Cap (market capitalisation) of the FTSE 250 quoted stock after the market close on 7th May, stood at £ 3,875.33 million along with an annual dividend yield of 2.6 per cent. On 7th May 2020, at market close, Direct Line Insurance Group Plc shares were 1.2 per cent down against its previous day closing price at GBX 280.60.
The total gross written premiums of the company surged by 4.7 per cent to £789.6 million in the first quarter of 2020 in contrast to previous year same period. In a move to ensure liquidity amid the Covid-19 outbreak, the company cancelled the final dividend for 2019.
Comparative Share Price Chart Of AVST, GVC, CTEC, HSV and DLG
(Source: Thomson Reuters)
A roundup of FTSE 250
The FTSE 250 index is widely used as a yardstick to assess the stock market by the investors. It also gives them a reflection of highly liquid and tradable securities by the help of which they can diversify their investments and mitigate risks. The FTSE 250 stocks are not just a subject of research by stockbroking firms and analysts, but also generate institutional interest, and promote investments. The constituents of the index are ranked in the order of their market capitalisation and are subject to change, depending on their performance.
While the country’s leading share market index, FTSE 100 index is a bucket of hundred listed stocks with the highest market capitalisation and a vast international presence, the FTSE 250 index comprises of stocks ranking from 101 to 350 in terms of float-adjusted market capitalisation. The major constituents of the FTSE 250 index are domestic companies. Therefore, the FTSE 250 index is an indicator of measuring the performance of the UK economy.
The stocks on the FTSE 250 index, somewhere though, rely heavily on the domestic economy. UK-centric businesses such as the Housebuilders, Specialist retailers, consumer services, insurers, brewers, and pub owners are main constituents of the FTSE 250 index.
The FTSE 250 index reportedly had fallen by 47 per cent during the Dot Com Bubble (2000) burst. In a period of substantial growth in the consumption and implementation of the internet, it was a result of excessive speculation in internet-associated companies. Later in 2008, during the Global Financial Crisis, the FTSE 250 index reportedly fell by 54 per cent. The sub-prime mortgages in the US housing market led to the credit crisis whose ramifications are felt till date even after a decade of its occurrence. As the supply for houses went up, but demand fell, several homeowners, defaulted on their loans leading to a decline in value of the property in the United States. FTSE 250 has fallen sharply by around 44 per cent since the Covid-19 pandemic struck the global markets. The Coronavirus outbreak which started in Wuhan (China) has taken a toll on the whole global markets.
FTSE 250 over a 5-year period
(Source: Thomson Reuters)
