Could now be the moment to start buying FTSE 250 shares?

with FTSE 100 recently breaking all-time records, the leading index has taken a lot of attention from investors. But while many people may focus on the main indices, I have spent time trying to figure out whether now might be a smart time to open some FTSE 250 stocks.

Room for growth

While the FTSE 100 has hit a high, the smaller index has fallen. Even after rising 21% since October, the FTSE 250 remains 7% below last year’s level.

With members of medium-sized companies, I see the index as offering me more exposure to the growth potential of the FTSE 100. As the economy has struggled lately, I think we have looked back to large, established companies in mature industries. That helps explain why the FTSE 100 has reached such a high.

Technically, however, the UK is now out of recession. While I remain pessimistic about the outlook for the next few years, at some point I expect significant economic growth to return. This can be good news for FTSE 250 companies with a proven track record of revenue growth, for example Price and Darktrace.

But if I wait until the economy takes off again, the stock price might go up. I think the time for me to invest can be ahead of possible economic recovery that boosts the FTSE 250 stock growth valuation. In other words, now.

Find stocks to buy

That’s why I’ve been looking for stocks from the index that I can add to my portfolio.

I’ve looked at Darktrace but haven’t found the business model attractive enough – I’d like to see it consistently generate huge profits and free cash flow. Kainos attracted my attention but the price-to-earnings ratio (P/E) of 49 did not.

What I’m looking for is a company like that ITV, which I share. It has a proven business model and consistent profitability, and it also trades at what I see as an attractive price. Indeed, the P/E ratio is only seven. Can an old-school broadcaster like ITV be a growth story? I can, thanks to the booming demand for independent studio services together with the growing digital business thanks to new streaming platforms.

Build a FTSE 250 portfolio

But my faith in ITV may be wrong. The chief executive appears to be struggling to communicate the potential of the business to the City.

I have bought a range of FTSE 250 stocks, which means that if one of them performs worse than expected, hopefully the overall impact on my portfolio will be limited.

I hope I may be right about what I see as some promising medium-sized companies that are currently selling at attractive prices on how I can do it once the economy is humming again.