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.

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.

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.

More on Investing Articles

Investing Articles

5 steps to start buying shares with under £500

Learn how this writer would start buying shares with a few hundred pounds in a handful of steps, if he…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

The FTSE 100 offers some great bargains. Is this one?

Our writer digs into one FTSE 100 share that has had a rough 2024 to date, ahead of its interim…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£9,000 of savings? Here’s my 3-step approach to aim for £1,794 in passive income

Christopher Ruane walks through the practical steps he would take to try and turn £9,000 into a sizeable passive income…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’d buy 29,412 shares of this UK dividend stock for £150 a month in passive income

Insiders have been buying this dividend stock, which offers an 8.5% yield. Roland Head explains why he’d choose the shares…

Read more »

Red briefcase with the words Budget HM Treasury embossed in gold
Investing Articles

Could the new UK budget spell growth for these 6 FTSE stocks? I think so!

Mark David Hartley considers six UK stocks that could enjoy growth off the back of new measures announced in the…

Read more »

Investing Articles

With a 6.6% yield, is now the right time to add this income stock to my ISA?

Our writer’s looking to boost his Stocks and Shares ISA. With this in mind, he’s debating whether to buy a…

Read more »

Dividend Shares

This blue-chip FTSE stock just fell 12.5% in a day. Is it time to consider buying?

Smith & Nephew is a well-known, blue-chip FTSE stock with a decent dividend yield. And its share price just dropped…

Read more »

Investing Articles

At 72p, the Vodafone share price looks to be at least 33% undervalued to me

Our writer looks at a number of valuation measures to determine whether the Vodafone share price reflects the fair value…

Read more »