Negotiating the current malaise in markets is a lot easier if one is pretty satisfied with things he or she already owns. Fortunately for this Fool, that’s still the case. In fact, I’m ready to buy even more of what currently sits in my portfolio. Here are two examples from the FTSE 250, both of which look cheap as chips and offer great income.
Moneysupermarket.com
I’ll hold my hands up and say that I didn’t time my entry to comparison website Moneysupermarket.com (LSE: MONY) particularly well. In the last year, the share price has slumped 36%.
Of course, trying to time the market is a mug’s game. As an experienced Fool, I know not to beat myself up too much. It’s impossible to predict the short-term direction of share prices. Besides, there’s still a lot to like here.
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The valuation remains compelling. Having been impacted by the Covid-19 pandemic and the reduction in demand for motor and holiday insurance, Moneysupermarket shares now trade at an analyst consensus of 13 times forecast earnings. Naturally, this assumes analysts have got their sums correct.
Personally, I’m optimistic about this. Actually, I wonder if the company could pleasantly surprise before long. After all, the rise in the cost of living has likely pushed many to at least check if they could save money by switching insurance policies, loans, mortgages and credit cards. Moneysupermarket is one of the biggest players out there, helped by its ownership of the Martin Lewis-driven site Moneysavingexpert.com. The acquisition of cashback site Quidco not long ago is another string to its bow.
This is not to say the shares are without risk. Given the lack of deals, one big headwind for the FTSE 250 member right now is that it’s not making much money from energy switching. This could continue for a while yet.
Then again, I’m in no rush. The dividends also provide some comfort. While the extent to which profits cover the bi-annual payouts could be higher, a near-7% yield isn’t to be sniffed at.
IG Group
Another FTSE 250 stock I’d continue to buy is trading platform provider IG Group (LSE: IGG). Like its index peer, IG’s share price chart hasn’t been a thing of beauty over the last year or so. Again, this isn’t completely surprising.
Like its listed peers CMC Markets and Plus 500, IG benefited from the explosion in trading activity as the pandemic hit. Unsurprisingly, a purple patch like this couldn’t last forever and many investors decided to cash out.
Do I wish I’d done the same? Honestly, no. This still remains a fundamentally excellent business that consistently achieves great margins and high returns on the money it invests in itself (otherwise known as Return on Capital Employed). The acquisition of US-based Tastytrade for $1bn last year also gives the firm a runway for growth across the pond.
Earnings are expected to slip in the current financial year. On top of this, there’s always the threat of more regulations being imposed on this industry to protect clients (mostly from themselves).
Even so, a big shift in market sentiment is likely to be great news for IG when it does (inevitably) come. In the meantime, a well-covered 6.6% dividend yield will do just fine.
