Some investors may feel that Bitcoin’s recent price rise makes it a more attractive opportunity than cheap UK shares. However, low valuations across the stock market and its track record of recovery suggest that a diverse portfolio of shares could offer superior risk/reward attributes than the cryptocurrency over the long run.
As such, now could be the right time to build a portfolio of high-quality stocks that trade at low prices. Here are two examples of such companies. They may improve your prospects of retiring early.
An attractive opportunity among cheap UK shares
Barratt’s (LSE: BDEV) 32% share price fall this year means that it appears to offer good value for money among cheap UK shares. It faces an uncertain future, but the housebuilder could benefit from the stamp duty holiday. The company seems to be breathing life back into the property market. And low interest rates may help to sustain increasing demand for new homes over the long run.
The company’s recent annual results showed a 46% fall in pre-tax profit. However, following its share price fall, investors can buy Barratt shares while they trade on a forward price-to-earnings (P/E) ratio of just 10.2. This suggests that they offer good value for money – especially since the company is forecast to post rising profitability in the medium term.
The best time to buy shares is often soon after bad news, Barratt could offer a sound investment opportunity for long-term investors.
An undervalued property stock
Landsec (LSE: LAND) also appears to offer good value for money relative to other cheap UK shares after its price fall. The REIT is currently down 46% in 2020. That is no surprise either. The prospect of lower future demand for office, leisure and retail space across the UK has caused weak investor sentiment.
This is reflected in the company’s current valuation. It trades on a price-to-book (P/B) ratio of around 0.4. This suggests that it offers a wide margin of safety, and that investors may have priced-in a potential fall in the value of its property portfolio.
Certainly, changing consumer and business tastes as a result of the pandemic could negatively impact on its future performance. However, with a diverse property portfolio and a low share price, it could deliver a recovery as the UK economy’s outlook improves. As such, it may be worth buying as part of a diverse portfolio of cheap UK shares.
Low-priced UK shares such as Landsec and Barratt could outperform Bitcoin in the long run. The stock market’s recovery prospects suggest that purchasing undervalued shares can be a profitable move.
Furthermore, Bitcoin’s lack of fundamentals means that it is impossible to accurately value the cryptocurrency. As such, from a risk/reward standpoint, a portfolio of British stocks could offer superior retirement prospects than the virtual currency over the long run.
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Peter Stephens owns shares of Barratt Developments and Landsec. The Motley Fool UK has recommended Landsec. 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.