In a stock market crash, some companies will recover more successfully than others. I reckon that buying family-owned firms could be a good way to spot long-term winners. After all, the family’s entire net worth is often tied up in the company they founded. Today, I want to tell you about three such FTSE 250 shares on my buy list.
The UK’s best tech stock? I’ve admired IT services group Computacenter (LSE: LON:CCC) for a long time. I’ve always avoided buying the shares because they’ve seemed too expensive. I now regret being so cautious, as this FTSE 250 share has doubled since September 2016, despite this year’s price crash.
Computacenter’s family ownership credentials come in the form of big stakes held by founders Sir Peter Ogden (16%) and Sir Philip Hulme (8%). Together, I estimate they have around £408m tied up in this business, which they founded in 1981.
Trading during the Covid-19 crisis has been “more robust than we anticipated,” according to CEO Mike Norris. Although some of the group’s industrial customers have been affected by shutdowns, demand has risen elsewhere as customers have needed Computacenter’s help with “homeworking and network resilience.”
Although Computacenter shares currently trade on 17 times 2020 forecast earnings, I reckon this business still has plenty of room for expansion. I see this FTSE 250 stock as a good buy-and-hold opportunity.
I’ve bought this cheap FTSE 250 share The latest stock to join my portfolio is consumer goods group PZ Cussons (LSE: LON:PZC). This FTSE 250 firm was founded in 1884 by George Zochonis and George Patterson. The Zochonis family still have a 29% stake in the business today.
PZ Cussons has faced challenging market conditions over the last few years, and the performance of the business has been disappointing. Sales are down by 27% since 2014, while profits have fallen by more than half.
However, the firm is now working hard to refocus its business on core brands, such as Cussons, Morning Fresh and Carex. Non-core brands are being sold and a highly-experienced new chief executive, Jonathan Myers, joined the business on 1 May.
I believe this group’s performance should improve and remain attracted to its exposure to Africa, which I see as a long-term growth market. I’ve added some PZ Cussons shares to my portfolio recently, as has star fund manager Nick Train.
This founder-CEO runs a tight ship The final FTSE 250 share I want to look at today is construction and infrastructure group Morgan Sindall Group (LSE: MGNS). I normally steer clear of companies involved in construction, which often have slim profit margins and suffer from periodic collapses.
However, I see Morgan Sindall as an exception to this rule. Founder and chief executive John Morgan still owns 9% of his £580m group and runs a tight ship. Cash generation is excellent and use of debt is minimal. Despite the disruption caused by coronavirus, Morgan expects the company to report an average daily net cash balance for calendar 2020. Very few firms can claim this.
The order book was worth £7.6bn at the end of March, unchanged from the end of 2019. Although I suspect order intake will have fallen in April and May, I’m confident in the medium-term outlook for this business. With the stock now trading on just nine times forecast earnings, I see Morgan Sindall as a fairly safe buy.
The post Stock market crash: 3 cheap FTSE 250 shares I’d buy today appeared first on The Motley Fool UK.
Roland Head owns shares of Morgan Sindall Group and PZ Cussons. The Motley Fool UK owns shares of PZ Cussons. 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.
Motley Fool UK 2020