NIO and Tesla are two shares benefiting from high profiles among private investors. However, they’re highly priced. To get rich from investing, I’d prefer to buy and hold the shares of profitable companies that are trading cheaply.
Even as the stock market recovers from the worst of the pandemic there are still plenty of cheap shares in the FTSE 350. Here are two I like.
A cheap share I’d buy and hold
Let’s be clear, comparison group Moneysupermarket (LSE: MONY) faces some challenges. Hence the shares are cheap. The P/E is only 14. It faces problems in the form of lower demand for energy switching, and less travel. The pandemic has hit a few of its trading divisions simultaneously. That meant in the three months to 30 September, revenue fell 16% to £85.1m.
However, I’m reasonably confident about the longer term. I believe awareness of the need to switch accounts in insurance, energy and banking must be growing: headline after headline makes it clear loyalty is penalised. Research from the Energy Switch Guarantee has revealed that nearly half (48%) of those surveyed said they had switched energy supplier in the last four years. I think though there’s further to go to get more consumers to change their behaviour and switch even more, which will be good news for MONY.
Looking at the company financially, as you might expect of a business whose primary asset is a website, margins and free cash flow are high. That’s good news for investors, Especially when the group also has no debt. Profits go to shareholders rather than paying lenders.
Overall, Moneysupermarket is a cheap share with growth and income potential. That makes it a share I’d buy and hold.
Another pandemic-battered share price
Shares in food-to-go group Greggs (LSE: GRG) are still well below where they started the year. Lockdowns inevitably reduced demand for its comfort food, especially among office workers.
However, a Morgan Stanley survey has shown that the average number of days that office workers want to work from home has dipped to around two days a week from 2.3 previously. This shows predictions of a permanent work-from-home culture might not quite be on the mark. That’s good news for Greggs. It makes its money from people on the move, and a big part of that is people who are commuting to or from work, or grabbing a quick lunch.
Other studies have shown our early lockdown habits have largely been replaced by more usual behaviour. I think plenty of consumers will be tucking into a vegan sausage roll once the pandemic subsides.
From this point on, the battered Greggs share price could be a winner, I feel. I fully expect it to outperform NIO and Tesla over the next 12 months and I have even more faith it can do it over a longer timeframe, such as the next three years. To me, it looks like a cheap share with plenty of future recovery potential.
