I have been looking for FTSE 250 shares to buy for my portfolio in 2022. I want to buy into a couple of investment themes next year, and I have been looking for the best companies to play these trends.
As such, here are the five FTSE 250 stocks I would buy next year.
Shares to buy for 2022
The construction industry is currently experiencing a boom in growth. Both the domestic and commercial sectors are reporting strong activity as money floods into the industry. To play this theme, I would buy Volution and Balfour to target two different sections of the industry.
Volution is a leading supplier of ventilation products with primary markets in the UK and Europe. According to its latest trading update, group revenues for the four months to the end of November were up 14.6%. A combination of acquisitions and organic growth contributed to the total.
Meanwhile, Balfour has rebounded from the pandemic and expects to report a profit in line with 2019 levels for the current financial year. It also has a £15.5bn ordered backlog, locking in around two years of revenue.
Despite their potential, both of these companies are exposed to supply chain risks and rising costs in the construction sector. Both of these challenges could hold back growth.
FTSE 250 property
As the commercial property sector rebounds from the pandemic, Hammerson could see a recovery in property values and rental income. I like this stock because it is trading at a price-to-book (P/B) value of 0.5, implying the value of the property on the company’s balance sheet is more than double the firm’s current market value.
However, there is a clear reason why the stock is so cheap. The outlook for the commercial property sector is highly uncertain. This means there is no guarantee the stock will ever trade back up to book value.
As the world places more emphasis on recycling and sustainability, I believe the demand for Biffa’s services will only expand. As one of the largest refuse operators in the country, it has the economies of scale required to process rubbish efficiently, at a cost consumers are willing to pay. Management is also looking for acquisitions to help improve the overall growth rate.
Despite its position in the market, this is a competitive industry. Biffa’s biggest challenge is to overcome competitor attacks on its market position.
Harbour Energy is my final FTSE 250 buy for 2022. Rising oil prices are great news for the oil sector, and they have bought a welcome relief for Harbour.
The North Sea operator can use the enhanced cash flows from higher sales and profits to pay down debt and strengthen its balance sheet. This should put the firm in a strong financial position to expand over the next few years.
The biggest risk the company may have to deal with is another decline in the oil price. This may hit its recovery plans.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.