With March fast approaching, I’m keen to continue buying FTSE 250 stocks. Offering great growth opportunities, the plan is to buy them today for an attractive price and hold for at least a decade.
The average return of the index since the early 1990s is a whopping 11%. Of course, I’m aware that past performance is no indication of future returns, but I’m confident these two shares can thrive moving forward.
Wargames leader
Of the stocks I currently own, one of my favourites is Games Workshop (LSE: GAW). That’s because I’m so bullish on the long-term outlook for the business.
One reason for that is the grip it has on the miniature wargames market. When it comes to competition, it doesn’t really have any.
It also provides stable passive income through its 4.5% dividend yield. And while dividends are never guaranteed, the fact Games Workshop only uses “truly surplus cash” to pay its shareholders provides me with confidence. In the last 10 years, its dividend has experienced major growth.
With a price-to-earnings (P/E) ratio of 23, there’s an argument to be made that the stock is expensive. While it doesn’t have much competition at the moment, I’d expect that to ramp up in the years ahead as the market becomes increasingly lucrative.
However, I’d argue that I’m paying for quality. And to offset threats such as rising competition, the business has diversified, most recently seen by its latest deal with Amazon to turn its Warhammer brand into a string of films and TV content.
TV stalwart
I’ve also been watching ITV (LSE: ITV) closely. Unlike Games Workshop, which operates in an industry rising in popularity, ITV is the opposite.
Its advertising revenues have taken a hit in the last few years. Given recent trends, it’s evident traditional advertising may no longer be the thriving industry it once was. As such, its share price has fallen drastically.
But I’m not giving up on ITV just because of that. And with a P/E ratio of 8.5, I see now as a smart time to swoop in and buy some shares.
At its cheap price, the stock yields an impressive 8.6%. That’s way above the FTSE 250 average of 3.4%.
What’s more, ITV is undergoing a strategic transformation that will put more emphasis on its Studios and Digital revenues. For example, it has invested in its online streaming platform ITVX, which helped its digital revenue jump by 24% in the first half of 2023.
ITV Studios also saw its revenue rise by 8% to £1bn. The business expects ITV Studios to “deliver total organic revenue growth of at least 5% per annum on average to 2026”.
Buy and hold
At their current prices, I think both of these stocks have the potential to provide me with some healthy gains in the next decade.
With Games Workshop, I’m excited to see where it’ll take its licensing business in the years ahead. For ITV, I’m bullish on the long-term outlook of its digital strategic transformation.
With any investable cash, I’m keen to pick up both.
The post I’d buy these FTSE 250 stocks and hold them for a decade appeared first on The Motley Fool UK.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Charlie Keough has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Amazon, Games Workshop Group Plc, and ITV. 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.
