2 FTSE 250 growth and dividend bargains I'd buy with £2,000 today

Building merchant and supplier Travis Perkins(LSE: TPK) has crashed like a ton of bricks over the last year, its share price falling 20% as the construction sector slows sharply.

It's a Travis-ty

The £3.19bn FTSE 250-listed stock is down another 1.52% despite today's Q1 trading update reporting a "solid start" to 2018. Like-for-like sales grew 3% for the three months to 31 March, with total sales up 2.4%. Its plumbing and heating division was particularly strong, with sales ratcheting up 19.7%. 

Travis Perkins reported resilient underlying trading, despite wintry weather in February and March, and said that its cost efficiency drive should offset difficult market conditions. Group CEO John Carter said it was still on course to match 2018 expectations even though "mixed trading conditions in our markets are expected to continue in the near-term".

Feeling Perkins

It is those mixed trading conditions that worry markets and coincidently, today's GDP figures show a construction slowdown, amid rising insolvencies and lack of confidence. This may be further weighing on Travis Perkins' share price.

However, winter is over, and the stock trades at a knock-down forecast valuation of just 11.9 times earnings. Earnings per share (EPS) are expected to be flat this year, but to rebound 6% in 2019, when hopefully Brexit uncertainty will finally be drawing to an end. The forecast yield is 3.5%, with excellent cover of 2.4. My Foolish colleague Peter Stephens recently called Travis Perkins a risky buy, and that looks right to me.

Kier we go

The outsourcing sector is beset by fear and loathing following the high-profile collapse of Carillion and the precipitous decline of Capita. If you believe that it pays to get greedy when others are fearful, you should take a closer look at support services firm Kier Group(LSE: KIE).

The £1bn FTSE 250-listed construction, services and property group was caught up in the recent sector sell-off, its share price down 22% in the last year, yet its plight is far from parlous. It has a strong order book, with 100% forecast revenues from its Construction and Services division secured to year-end on 30 June, and more than 65% secured to June 2019. As my Foolish colleague Paul Summers points out here, the division's total order book now sits at £9.5bn, with a juicy £3.5bn pipeline in its Property and Residential Divisions.

Kier royale

This provides good future earnings visibility on top of strong recent earnings, which saw underlying first-half revenue jump 8% to £2.15bn, and pre-tax profit climb 5% to £48.8m. This is a solid performance, especially when you take into account  the concerns afflicting the construction industry.

City forecasters seem positive, predicting that EPS will rise 10% in the year to 30 June, then repeat the trick by rising another 10% the year after. Yet recent share price slippage has trimmed Kier's valuation to just nine times earnings. That should make you sit up and take notice, and so should this: the forecast yield is 6.6% for 2018, with dividend cover of 1.7, rising to 6.8% in 2019. Throw in the group's focus on financial and operational discipline, and you have a highly tempting growth and dividend combination.

Capital Gains

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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