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The FTSE 250‘s filled with a vast range of exciting businesses. And right now, there are two stocks at the top of experts’ lists of ‘best stocks to buy’. So what are these shares? And should investors be rushing to buy them right now?
1. Branded merch
First up is Peel Hunt‘s top pick of 4imprint Group (LSE:FOUR). The marketing enterprise makes and sells customised company-branded merchandise such as apparel, bags, stationery, as well as promotional displays.
While certainly not an essential expense, companies are keen to get their brands out there, especially during events like conferences, translating into some solid growth figures over the last three years. Revenue expansion has averaged 9.5% since 2022, with profits coming in hotter at 20.9%.
With management recently raising its full-year guidance for 2025, Peel Hunt has placed its share price target at 5,090p – around 26% higher than where the FTSE 250 stock trades today. However, even this bullish forecast comes with some caveats.
As previously mentioned, branded merch is ultimately a discretionary purchase. And with fears of an incoming US economic slowdown, demand might start to stumble. And this impact may be further amplified by volatility within foreign exchange rates.
Nevertheless, with a price-to-earnings ratio of just 10.7, that might be a risk worth considering for long-term investors.
2. A healthcare landlord
The second top pick comes from JP Morgan, which has Primary Health Properties (LSE:PHP) in its sights. This unique real estate investment trust (REIT) landlord owns one of the largest portfolios of properties used by private healthcare professionals as well as the NHS. Think GP surgeries, pharmacies, dental clinics, etc.
With the bulk of its leases government-backed, the company’s long since enjoyed highly stable and predictable cash flows linked to inflation. And subsequently, management’s been able to deliver dividend hikes for more than 25 consecutive years.
Like many REITs, Primary Health Properties has seen its share price come under significant pressure in recent years. After all, higher interest rates don’t exactly create an ideal environment for landlords with lots of mortgage debt.
Nevertheless, given the nature of the firm’s clientele and the perceived strength of its cash flows, the analysts at JP Morgan have put their share price target at 114p. Compared to where the stock trades today, that’s a 17% potential capital gain paired with a tasty-looking 7.3% dividend yield.
However, just like with 4imprint Group, there are still some crucial risks to consider.
Having the NHS as a primary tenant can be advantageous. But it also means that budget cuts and policy changes can be quite disruptive. It could even lead to lease agreements not being renewed. And since finding new tenants for specialised healthcare facilities isn’t easy, occupancy could come under pressure along with cash flows.
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The bottom line
Looking at the bull and bear cases of these two FTSE 250 stocks, I’m inclined to agree with the experts. Both businesses show promising potential at reasonably cheap valuations. That’s why I’m taking a closer look at both these businesses. But they’re not the only opportunities I’ve spotted this week.
