The pandemic is nearly over, but e-commerce continues to boom. Between 2020 and 2024, it is slated to grow by almost 50% globally as per data provider Statista. This bodes well for stocks in the sector too, which have already made gains because of the lockdown. Here I will talk about two such FTSE 250 stocks.
Tritax Big Box makes big gains
The first is Tritax Big Box (LSE: BBOX), which is a real estate investment trust (REIT) focused on logistics. With this focus, it is hardly surprising that it performed quite well last year. Its results for this year so far as also quite healthy. In line with this, its share price has been on the upward journey as well. It has gained over 45% in the past year alone.
And when I look at its valuations, it appears that it can rise even more. If I consider it purely in terms of its price-to-earnings (P/E) ratio, the stock has a dirt cheap valuation of 5.5 times. To me, this makes it a no-brainer stock to buy for my portfolio. But there is a catch. Not everyone is convinced of the merits of the P/E ratio in assessing REITs, which is something I talked about at length in another article recently.
What do the FTSE 250 stock’s valuations say
I still see it as a useful tool to understand where the stock stands agains its FTSE 250 peers. However, I did also consider the more popular way of assessing REITs, which is the price-to-net asset value (P/NAV). The latest NAV value I can work with is up to 30 June. If I compare this to the price on the date, the company appears fairly valued. Despite this, the stock price is up by almost 20% since.
This to me indicates that investors expect even better days ahead for it. Also, I think the general buoyancy in stock markets has helped. Even though there are some questions around the appropriate valuation for it, I would be happy to buy this stock.
Big Yellow Group sees boom too
Another FTSE 250 stock I would ideally like to buy is the self-storage provider Big Yellow Group. Since it caters to both homes and businesses, it too has benefited in the past year from the online shopping boom. Its share price is up by 35% in the last year and in the last three years, it has risen by 65%.
In terms of its its valuations, its P/E ratio is around 10 times. This is not as competitive as Tritax Big Box, but even this is pretty cheap in my opinion. In this case too, however, it is a good idea to consider NAV as well.
In this case, the P/NAV shows that the stock was slightly overvalued on 31 March, which is the date up to which we have data on NAV. By overvalued, I mean that the price is higher than the NAV per share. But here too, its share price has continued to rise since, indicating investor optimism. I am optimistic about this one, too. Big Yellow Group is on my list of stocks to buy.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Tritax Big Box REIT. 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.
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