I’m going to tell you a great way to find bargain buys in the current market.
Now let me quickly say that it will not involve complex maths, City connections, a business degree or throwing darts at the Financial Times.
Instead, it actually involves one of the finest – and simplest – pieces of investing advice I have ever heard.
And in a minute, I’ll share that wisdom freely with you.
But first, let me explain why now in particular should be a great time to absorb this priceless advice.
Celebrating with cold drinks in their hands and smug grins on their faces
I’m sure you don’t need me to tell you that the market has been on a roll of late.
The FTSE 100 has risen an excellent 12% this year, and had actually climbed a superb 18% at its May peak.
Indeed, as I said the other week, interest rates remain at rock-bottom levels, blue-chip dividends keep marching higher…
…and the market has understandably reacted with healthy share-price gains.
And when you realise that names such as easyJet, Lloyds Banking and ITV have all doubled or more from their 52-week lows…
…I am pretty sure this scorcher of a summer has seen many smart Fools on their sun loungers celebrating with cold drinks in their hands and smug grins on their faces.
The obvious, genuine, 100% bargain-basement buys
There is, of course, a flipside to this year’s searing market.
In short, it’s not as easy to find bargain-basement buys as it once was.
Don’t get me wrong, I still think there are plenty of reasonably priced shares out there…
…and that shares in general offer great long-term upside from here.
But let’s face it, August 2013 certainly ain’t March 2009…
…the month when the market hit its banking-crash low and was awash with prospective multi-baggers that went on to fund early retirements for many ordinary investors.
I don’t know about you, but right now I am looking for those obvious, genuine, 100% bargain-basement buys…
…I mean, the stocks that enjoy a great chance of doubling or more in the years to come.
And these days they are just that bit harder to find…
…or are they?
How embarrassing… this bargain was sat in my portfolio all along!
Right, here’s that bit of important advice I mentioned earlier.
“Today’s very best bargain buys could be sitting in your portfolio right now”.
Now I bet some of you will be disappointed about such a simple piece of wisdom.
But trust me, forgetting this advice has cost me a fair bit of money during this sunny summer.
You see, I own shares in a small-cap called M Winkworth.
I won’t bore you with the full details, but I bought the shares more than two years ago as I thought the business looked good and the price looked cheap.
Now look at this chart:
Source: Capital IQ
Basically I invested once and never ever thought to buy again…
…even though the price barely moved, the subsequent results looked sound and the dividend was lifted 7% each year.
Instead, I was too busy trawling the market for other possible bargains to notice the actual bargain that was sat in my portfolio all along.
It was a textbook investing example of not seeing the wood for the trees. It’s also highly embarrassing.
And it goes without saying that everything I bought instead has not done as well as M Winkworth.
The buying opportunities sitting under your nose
I still have plenty of laggards in my portfolio, although at least M Winkworth has started to move higher now.
I’m pretty sure you have one or two laggards lurking in your portfolio, too.
And maybe, just maybe, these shares remain bargains and would be the perfect home for any new cash.
I mean, you don’t want to make the same mistake as me and overlook astounding buying opportunities that were staring you in the face and were just waiting to be bought.
I’m pleased to say ace Fool investor Nate Weisshaar is not making that same mistake.
You see, he’s just scoured the Motley Fool Share Advisor portfolio to declare one of the service’s few laggards as a bargain buy for Foolish investors.
Nate told me: “This is a well-run company, which dominates a market that looks to have plenty of growth ahead of it.”
And he re-recommended the share once again to Fools reading Share Advisor just last week.
I am convinced Nate is on to a winner. The shares have lagged the market, yet in my opinion the company still looks strong, the valuation still seems cheap…
…and many members of Share Advisor will already have this promising opportunity sitting in their portfolios and remain all primed to collect the potential large rewards.
Until next time, I wish you happy and profitable investing.
> Maynard owns shares in M Winkworth.
