The FTSE 250 firesale is here! 2 bargain stocks to buy today

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The frantic selling of UK assets intensified on Monday as the fallout from last week’s ‘mini budget’ continues. The pound has slumped to record lows against the US dollar. Meanwhile, the FTSE 250 — an index which is highly geared towards British companies — is trading at its lowest since October 2020.

Worries over the UK as an investment destination might be growing. But I feel the rapid sale of many stocks is driven by emotion rather than sound investing strategy. This leaves an opportunity for level-headed investors to nip in and grab a bargain.

Here are two FTSE 250 stocks I think are brilliant buys after falling today.

10.2% dividend yield!

Housebuilders like Vistry Group (LSE: VTY) are sinking as markets ponder the prospect of emergency action by the Bank of England. Some economists believe an interest rate hike of 1% later this week is imminent to shore up the plummeting pound.

The risks to Vistry et al might be rising. However, I believe the threat from a rising interest rate is now priced in. This FTSE 250 index stock now trades on a mega-low price-to-earnings (P/E) ratio of 4.8 times for 2022. Its dividend yield meanwhile has leapt to an enormous 10.5%.

Poor housebuilding activity in recent decades has created a huge shortage of available homes. And this means that, even as interest rates rise, property prices also keep on rising. Rightmove said today that average asking prices rose 8.7% in September annually, up from 8.2% in August.

It’s my opinion that the Stamp Duty cuts announced last week by Kwasi Kwarteng could also boost home sales, even as interest rates rise. Tim Bannister, director of property science at Rightmove, has even said that “Friday’s announcement is likely to stimulate some more demand” in the housing market.

A top renewable energy stock

Spreading risk aversion on the London Stock Exchange has even pulled defensive stocks like Greencoat UK Wind (LSE: UKW) lower.

This FTSE 250 share has been trading on rock-bottom P/E ratios in spite of recent price gains. And today’s decline has pushed its earnings multiple to a mere 3.1 times. With its dividend yield also rising to 4.9%, I think Greencoat’s a top value stock to buy.

Even as the UK economy toils, Greencoat — which is invested in 45 wind farms across the country — can expect revenues from its electricity-generating assets to remain stable. I believe the business is actually a solid long-term buy as demand for low-carbon energy goes from strength to strength.

The cost of keeping wind turbines in working order is high. The future costs to Greencoat could rise sharply as extreme weather events become more common too. But all things considered I think the rewards of owning the share outweigh the risks. And especially so at the current share price.

The post The FTSE 250 firesale is here! 2 bargain stocks to buy today appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind and Rightmove. 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.