£5k to invest? I’d add these cheap FTSE stocks to my portfolio now

With a ‘v-shaped recovery’ looking increasingly unlikely, one Fool argues that investors can still find cheap FTSE stocks that could make a nice profit.

| 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.

In these uncertain times, how can investors find safer ways to invest their hard-earned cash? More and more people are looking for cheap FTSE stocks as a potential destination for their savings, with lockdown providing plenty of time for research. 

Cheap FTSE stocks exist, if you look carefully…

Can investing in shares give you great returns, even during coronavirus? Of course! But you must pick your portfolio wisely. Here are three shares from the FTSE 350 that I think show great promise for the future:

Back to bus-ness

National Express (LSE: NEX) has started selling travel tickets for July 1st onwards. The company will start off by operating a core network in the UK focused on large and medium-sized cities and towns. After a tough few months, some earnings will finally start trickling in.

With its shares still selling more than 50% lower than the January high, there could be a nice profit when earnings normalise in 2021. Whilst the current ratio is relatively low, the company has improved its liquidity position – it now holds £1.5 billion in cash and undrawn committed facilities. And, at 210p, these shares are trading at just six times last year’s earnings.

Though future earnings are likely to be largely depressed and dividends interrupted in the short-term, 2021 should be a brighter year for National Express. Its shares have more than doubled from its lockdown lows, but there could still be a lot of upside potential!

A potential gold mine

The Federal Reserve is printing huge amounts of money. When the money supply increases, the likely outcome is inflation. As such, commodity prices are likely to skyrocket. Gold-mining companies could benefit greatly from rising commodity prices and so too could their shares!

Centamin (LSE:CEY) is a FTSE 250 stock currently showing strong gains – it’s up 80% from its March low. Centamin says its Sukari mine in Egypt is fully operational. It has been unaffected by the coronavirus outbreak and there are enough workers and supplies to last into the third quarter – when global travel restrictions are expected to ease.

It is currently providing a dividend at a 4.4% yield of the current price (186p). This passive income can be re-invested and bolster your growing portfolio.

Anglo American dream

Another FTSE mining company, Anglo American (LSE:AAL) produces platinum as well as other metals and minerals needed for industry. It is currently selling under 10-times earnings, with a current ratio just under 2.

EBITDA has increased consistently since 2015, when crashing commodity prices precipitated a loss. The company has cleaned up since then, trimming down the total number of mines it operates and cutting costs – whilst increasing revenues. Improvements in cost control and productivity, along with better prices has done wonders for profits and cash generation. Which is reflected in the balance sheet too – debt’s down from $12.9bn in 2015 to $4.4bn today. 

The stock is fairly expensive at 1,573p, so the amount you should purchase depends on the total amount you are willing to invest. Mining stocks aren’t very glamorous, but that doesn’t mean they won’t add a shine to your diversified portfolio!

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.

Toby Aston has no position in any 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.

More on Investing Articles

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Is the S&P 500 going to 10,000 by 2030? This expert thinks so

One stock market strategist sees animal spirits taking hold and driving the S&P 500 index even higher by the end…

Read more »

Investing Articles

I’m expecting my Phoenix Group shares to give me a total return of 25% in 2025!

Phoenix Group shares have had a difficult few months but that doesn't worry Harvey Jones. He loves their 10%+ yield…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

14.5bn reasons why I think the Legal & General share price is at least 11% undervalued

According to our writer, the Legal & General share price doesn’t appear to reflect the underlying profitability of the business. 

Read more »