Got £2k to invest? I’d buy these cheap FTSE stocks right now

If you have £2k to invest, buy these two cheap FTSE stocks right now to maximise your returns, says Rachael FitzGerald-Finch.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

After the stock market crash in March, many good companies listed on the FTSE are still going cheap. Many investors are selling their stocks and keeping share prices down. Moreover, the short-term economic forecast is entirely pessimistic. This means anyone buying shares now is likely doing so with an eye to the future.

For a long-term investor, future gains are the silver lining to the stock market doom and gloom. And since higher returns can be made from lower share prices, a bear market is a much better time to be building your wealth. Cheap FTSE stocks are safer investments than those made at the height of a bull market.

Long-term investors need to find good cheap companies that will thrive in any market. Investing £1,000 in each of the two shares below could be a great place to start.

Should you invest £1,000 in Taylor Wimpey right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Taylor Wimpey made the list?

See the 6 stocks

Ashtead

Ashtead Group (LSE: AHT) is a provider of industrial equipment rentals. Its main business is in North America where it operates as Sunbelt, supplying many types of customers from construction to the entertainment industry.

Ashtead boasts an impressive track record of adapting its business model to the macroeconomic backdrop. This performance is underpinned by strong returns on invested capital that have resulted in a steadily climbing share price over the last decade.

There every reason to believe Ashtead will continue its ascent. It has many business advantages at its disposal and will be able to use its scale, differentiation, and cash levers to manage the downturn. In the US, rising equipment costs and changing health and safety regulations will likely provide further rental opportunities. Additionally, the downturn itself may uncover further acquisition prospects, consolidating its position.

Ashtead’s £500m buyback policy offers alluring returns for shareholders, although a yield at under 2% may not be the most attractive. However, the dividend per share has increased every year over at least the last five years. The company’s cash reserves imply it’s affordable.

Ashtead is currently on sale for around 2,130p, with some analysts giving the firm a fair value of 2,800p.

Moneysupermarket.com

Moneysupermarket.com (LSE: MONY) is the UK’s largest provider of online price comparison services. It owns four major trading brands in MoneySuperMarket, MoneySavingExpert, TravleSuperMarket, and Decision Tech. About half the group’s revenues come from insurance, 22% from money, and 17% from home services, such as electricity providers.

Moneysupermarket’s strong competitive position comes from its big size and ability to differentiate itself from its competitors. It aims to sustain this lead by offering a new energy switching service that tailors its offerings between low-cost products and those with other specific features.

However, since Moneysupermarket’s revenues are directly related to the services it promotes, the coming recession could adversely affect its travel and money streams. That said, this will likely be offset by growing revenues from its insurance products, as premiums rise due to increasing payouts from Ogden rate changes

Moneysupermarket has a solid set of financials. Excellent sustained revenue growth, profitability, and cash generation ability gives the group a well-earned reputation for dependable dividends. Its current yield is a decent 3.6%.     

Both Moneysupermarket and Ashtead are dependable and cheap FTSE stocks I want in my diversified portfolio. To maximise returns, I would buy them both right now.

Of course, there are plenty of other passive income opportunities to explore. And these may be even more lucrative:

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rachael FitzGerald-Finch has no position in any of the shares mentioned. The Motley Fool UK has recommended Moneysupermarket.com. 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

3 high-yield dividend shares to consider buying for a retirement portfolio

Dividend shares can provide retirees with regular passive income in their golden years. Our writer picks out three with yields…

Read more »

Investing Articles

Tesla stock has halved. Could it now double – or halve again?

After a wild few months for Tesla stock, Christopher Ruane weighs some pros and cons of the investment case. Could…

Read more »

Investing Articles

Does it make sense to start buying shares as the stock market wobbles?

Does a rocky stock market make for a good or bad time to start buying shares? This writer reckons it…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£15k of passive income a year? It’s possible with the right dividend strategy!

To figure out how much dividends are needed for a lucrative passive income stream, investors must understand which strategies get…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

As US markets wobble, I’m listening to Warren Buffett!

The long career of billionaire investor Warren Buffett has included plenty of market turbulence. Here's what our writer's learnt from…

Read more »

UK money in a Jar on a background
Investing Articles

5 shares yielding over 5% to consider for a SIPP

Christopher Ruane introduces a handful of FTSE 100 and FTSE 250 shares he thinks an income-focussed SIPP investor should consider.

Read more »

Investing Articles

Here’s how an investor could invest a £20k ISA to target £1,500 of passive income per year

Can a £20,000 ISA throw off close to £30 per week on average of passive income when invested in blue-chip…

Read more »

Investing Articles

As gold hits $3,000, this FTSE 100 stock is primed for blast off

As Western institutions scramble to get as much gold as they can lay their hands on, Andrew Mackie believes this…

Read more »