Forget Bitcoin! I think buying the HSBC share price could be a better way to get rich

HSBC Holdings plc (LON: HSBA) could offer a more appealing risk/reward ratio than Bitcoin in my opinion.

| 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.

Arrowings ascending on a chalkboard

Image source: Getty Images.

While the growth potential of Bitcoin may make it an appealing investment opportunity to some individuals, there are a number of FTSE 100 and FTSE 250 shares that could offer superior risk/reward ratios. Among them is HSBC (LSE: HSBA), which could benefit from the growth prospects across a variety of regions over the coming years.

Since the stock has a relatively low valuation and dividend investing potential, it could be worth buying alongside another growth share that reported a disappointing trading update on Thursday.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Uncertain future

The company in question is metrology specialist Renishaw (LSE: RSW). It reported that the difficult trading conditions experienced in the first half of its financial year have continued in recent months. A slowdown in demand in Asia for its encoder products and from large end-user manufacturers of consumer electronic products has been the cause of this.

These trading conditions are expected to continue throughout the remainder of the year. It now expects revenue and adjusted pre-tax profit to be below previous guidance, which has caused the company’s stock price to decline by as much as 15% following the update.

While disappointing, Renishaw’s share price fall could present a buying opportunity. The stock now trades on a price-to-earnings (P/E) ratio of around 21, which suggests that it could be relatively attractive given its long-term growth potential. While further volatility could be ahead for its share price, the company has a sound track record of high growth, which could allow it to generate impressive share price returns in the long run.

Growth potential

As mentioned, HSBC appears to offer an improving financial outlook. The company is forecast to post a rise in earnings of around 5% in the current year. This is at least partly due to the strategy being employed by the business, with it investing heavily in growth opportunities in markets where it could enjoy growing demand for its services in the long run.

Alongside this, the bank is seeking to become increasingly efficient. This will take time, but recent updates have suggested that it is making progress in removing unnecessary costs from the business.

With HSBC trading on a P/E ratio of around 10.5, it appears to offer a wide margin of safety at the present time. Fears surrounding the prospects for the world economy, and particularly China, seem to be weighing on investor sentiment to a large degree. This situation could persist over the near term, but forecasts for the wider Asian economy continue to be relatively upbeat. They show that increasing wages and wealth levels could lead to rising demand for a variety of banking products.

Therefore, while still a relatively unpopular share, HSBC could offer an impressive long-term outlook. A dividend yield of 6.4% which is covered 1.5 times by profit indicates that it may offer an impressive income investing outlook.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Peter Stephens owns shares of HSBC Holdings. The Motley Fool UK has recommended HSBC Holdings and Renishaw. 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

Thoughtful anxious asian business woman looking away thinking solving problem
Investing Articles

3 UK shares to buy in a stock market crash

Inflation and rising interest rates have our author on the lookout for a stock market crash. Here’s what he’s looking…

Read more »

Futuristic front of NIO car in Norwegian showroom
Investing Articles

Down over 50%, is NIO stock the best EV pick right now?

NIO stock has dipped over 50% in the past year. Does this create the perfect opportunity to buy or are…

Read more »

Buffett at the BRK AGM
Investing Articles

3 Warren Buffett techniques to build my wealth

Our writer shares a trio of Warren Buffett investing habits he hopes can help him build his own wealth.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Aviva shares are in demand. Should I buy too?

Hargreaves Lansdown investors were piling into Aviva shares last week. This Fool is asking whether he should join the queue.

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 reasons why I think the IAG share price could rally this year

Jon Smith writes about how improving risk sentiment could help the IAG share price this year, but not without risks…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

A passive income stock I’ve bought to supercharge my wealth!

I think this UK dividend stock is one of the best to buy for healthy long-term passive income. Here's why…

Read more »

British Pennies on a Pound Note
Investing Articles

3 hot penny stocks I’m buying in June!

With their exciting growth potential, penny stocks can be great investments. I've found three to buy next month based on…

Read more »

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

2 green dividend shares I’d buy with £500

Jon Smith explains two dividend shares with a focus on renewable energy that have caught his eye at the moment.

Read more »