After years of underperformance, many high FTSE 250 shares commerce for subsequent to nothing proper now. Round 50% of the index’s complete earnings come from the UK. Subsequently, it’s suffered as financial weak spot and political volatility on these shores have seen traders look elsewhere.

Discount hunters have to train warning when looking for shares to purchase. Though some low cost shares have traditionally yielded glorious returns, their low valuations at present point out enormous challenges going forwards.

With this in thoughts, listed here are two FTSE 250 shares I believe savvy traders ought to take into account avoiding this month.

Energean

At 995p per share, fossil gasoline producer Energean (LSE:ENOG) appears to be like low cost from each an earnings and revenue perspective.

Its ahead price-to-earnings (P/E) ratio sits at 4.4 instances. Its dividend yield for this 12 months, in the meantime, is an astonishing 10.4%.

However I’ve no plans to purchase the corporate for my portfolio. At the start, Energean produces most of its pure fuel from Israel, a reality which exposes traders to vital geopolitical danger.

Moreover, its dependence on this risky area will probably be even larger when the agency sells its Italian, Croatian and Egyptian property to Carlyle Group for up to $945m.

I’m additionally involved concerning the firm’s future income as international locations step up their internet zero ambitions. Oil and fuel corporations like this face large uncertainty as renewable and nuclear power sources turn out to be extra well-liked.

On the plus facet, Energean’s operational efficiency has been extremely spectacular of late. Fossil gasoline manufacturing soared 49% within the first quarter, which consequently pushed revenues 43% larger. Extra strong information might assist the corporate escape of its current share price downturn.

However on stability, I believe investing right here stays too dangerous.

Diversified Vitality Firm

Diversified Vitality Firm (LSE:DEC) is one other power share I’m eager to keep away from for related causes. However this isn’t my solely fear about investing right here.

As of December, the corporate had a debt mountain of $1.3bn. And to try to get this down, Diversified introduced plans to slash dividends by two-thirds. Extra extreme motion might come down the tracks too if oil costs expertise contemporary turbulence.

Nonetheless, it’s not all dangerous information on the dividend entrance. The 8.4% ahead yield on Diversifed Vitality shares nonetheless smashes the three.4% common for FTSE 250 shares.

As well as, the dividend rebase will give it extra capital to make acquisitions to drive earnings development.

That stated, I nonetheless imagine the dangers of proudly owning the corporate’s shares at present outweigh the potential advantages. I’m not alone in fearing for Diversified Vitality both. In accordance with shorttracker.co.uk, it’s presently the second most shorted inventory on the London Inventory Change proper now.

It has quick curiosity of 8.1%, with 9 hedge funds betting in opposition to it. Funds and institutional traders are generally mistaken. However they have a tendency to get it proper way more usually. So this vote of no confidence is a giant pink flag to me.

Diversified Vitality’s dividend yield suggests good worth. However I believe there are extra wise methods to supply a market-beating passive revenue proper now,