Now is a perfect time to buy into stocks that could perform well through the year.
While it’s not easy to tell potential winners from losers, below are three FTSE 250 stocks to buy in December.
FTSE 250 Shares To Consider:
- Elementis (ELM)
- Safestore (SAFE)
- Softcat (SCT)
1. Elementis (ELM)
Elementis (ELM) tops the list of UK FTSE 250 stocks to buy now that the economy is on a rebound.
The UK construction industry has been strong through the year, and with the worst of the 2020 disruptions almost over, it is likely to remain strong going forward. This means that demand for its products, especially paint and adhesive chemicals, used in the construction industry is only set to grow.
Besides the construction industry, post-pandemic consumer demand is rebound in most Elementis core markets, such as the US and the UK. This presents good prospects for consumer products such as deodorants, which Elementis supplies the materials necessary to manufacture.
Aside from a largely positive market outlook for the economy, Elementis’s books paint a picture of a strong company.
One of the most important metrics when analyzing the viability of a company is its current ratio. This gives an idea of whether a company has the resources to cover all its short-term debt obligations without straining operations.
Elementis’s current ratio stands at 2.27, meaning it has more than enough resources to cover its short-term debt obligations.
One of the advantages this gives the company is the room to borrow on friendly terms, if it needs to take advantage of any emerging market opportunities.
At the same time, it means the company is cushioned from a substantial increase in debt repayment costs relative to its assets, should the Bank of England decide to raise costs.
Elementis’s charts paint a picture of stock with good prospects too. If it keeps trending above the 100-day moving average, the price level could see it test GBP 160 or more within the month.
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2. Safestore (SAFE)
Self-storage is booming
The self-storage market is on a growth trajectory, and Safestore (SAFE) is reaping big. In the last 12-months, this stock has gained by 50%, and the momentum remains up.
Besides operating in a growth market, and insiders buying the stock, SAFE has some pretty solid fundamentals too.
It has a profit margin of 247%, which means it has a competitive advantage in the market. As such, it can make a significant amount of its sales without the risk of losing customers.
Its competitive advantage is also evident in its relatively high quarterly revenues growth of 14.3% compared to the same period in 2021.
The company’s balance sheet looks quite healthy. Safestore has a current ratio of 0.96, which means it has enough current assets to offset its short-term liabilities. Safestore has relatively high cash flows too. The company has operating cash flows of GBP 107.8 million. This means it has more than enough resources to cover its everyday operations.
Safestore’s charts a picture of growth too. All through the last year, it has been trading steadily above the 100-day moving average and currently, it's testing this level again.
This makes its current price a perfect entry point for December.
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3. Softcat (SCT)
Betting big on IT Services
Softcat (SCT) is one of the UK stocks that defied the pandemic, and in the past year, is up by 28%. With the economy on a rebound, this stock now looks more attractive than ever.
That’s because the market for IT services is only set to get bigger, as confidence in the economy triggers companies to start spending on services that enhance efficiency.
Softcat’s internal fundamentals look pretty good too. With a current ratio of 1.42, Softcat paints the picture of a company that has enough resources to handle its short-term liabilities comfortably.
Its cash flows levels are net positive too and stand at GBP 93.34 million. That’s a signal to a company with enough liquidity to carry out its daily operations without struggle. It’s a huge vote of confidence for SCT stock in terms of guaranteed business continuity.
From a look at its technicals, this stock is in a buying zone. SCT is trading below the August highs but it has the potential to make new highs in the month. SCT is a good stock to buy in December.
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