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Building a diversified portfolio of FTSE 250 Sharing is a great way to consider building long-term wealth. Spreading more money across a range of UK mid-cap stocks spreads the risk. It also allows individuals the opportunity to take advantage of multiple investment opportunities.
Another way investors can diversify is by buying a selection of value, growth and dividend stocks. The first two phases can provide significant financial appreciation over time. The latter can provide stable income over the long term that can be reinvested to increase compounded returns.
With this in mind, here are the top three FTSE 250 stocks for new ISA investors to consider today.
Price
The rapid increase in weapons use bodes well for defense businesses alike Babcock International Group. But unlike other industry heavyweights such as BAE Systemsthis share still looks cheap, on paper.
For the fiscal year ending in March, Babcock trades at a multiple of 11 times earnings (P/E). This makes it one of the cheapest defense stocks on the list London Stock Exchange.
On top of this, the company’s price-to-earnings growth (PEG) ratio is only 0.3 this fiscal period. This is below the widely accepted value benchmark of 1 and below.
Babcock, which provides engineering and training services to the armed forces in the UK and overseas, saw revenue rise by 11% year-on-year in the six months to September.
Supply chain issues continue to be a threat to this defense stock. But I think this is more than baked into Babcock’s low rock rating.
Growing up
Building materials suppliers are not out of the woods just yet. A brick maker Ibstock (LSE:IBST) remains vulnerable to the Bank of England keeping interest rates at or near current higher-than-normal levels, hampering housing market recovery.
However, I am optimistic that the FTSE 250 company can overcome its problems of recent years. Home sales data is strengthening and may continue until rates (as expected) are cut and competition among mortgage providers intensifies.
In this case, construction may rise significantly from recent levels. Several of the UK’s biggest housebuilders have already committed to starting construction from 2025 onwards. That’s why City analysts expect Ibstock’s earnings to increase by 37% and 34% in 2025 and 2026 respectively.
Given the age of Britain’s housing stock, the company can also expect strong demand from the repair, maintenance and improvement (RMI) sector.
Assignments
The FTSE 250’s are full of real estate investment trusts (REITs) that you can buy. These companies are designed for income investors, as industry regulations state that at least 90% of rental income must be distributed in the form of dividends.
Supermarket Income REIT(LSE:SUPR) is one of my current favourites. And it’s not because the stock’s 9.2% dividend yield this fiscal year (to June) is the industry’s highest.
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It is also because the company has consistently increased profits despite weak economic growth and inflationary pressures in the UK. This reflects the trust’s focus on the highly defensive retail market, consistent with its list of blue-chip tenants including FTSE 100 grocery stores Tesco again Places to stay in Sainsbury.
Supermarket Income’s share price may struggle to grow if interest rates remain at current levels. But the prospect of big and reliable profits still makes it worth considering, in my book.
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