Forget Wise! I’d buy these 2 shares instead

I think the Wise share price is overvalued at the moment at 975p. Here are two UK shares I’d buy instead for steady returns.

| 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.

One English pound placed on a graph to represent an economic down turn

Image source: Getty Images

Fintech company Wise was directly listed on the London Stock Exchange in July. Since then, its share price has increased by nearly 11%. The initial scramble that most promising IPOs see has pushed Wise shares from 880p to 975p. But when I step back and look at the financials, the stock is not an attractive buy for me at the moment.

A forward P/E ratio of 313, small market share and stiff competition from others in the crowded fintech space make me wary, despite Wise’s potential. The company does not fit my investing strategy of buying at a lower-than-average entry price with room for growth. Here are two shares I’d buy instead.

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!

Shares to buy #1: BAE Systems

BAE Systems (LSE: BA) is the UK’s largest weapons manufacturer and is one of the largest defence contractors in the world.

Its share price has risen 11.1% in the last 12 months and a whopping 40% since November 2020. The company has made a steady recovery after taking a major trade during the pandemic.

BAE’s financials look impressive. Despite restrictions, sales rose by 7% to a little over £10bn in the first half (H1) of 2021 compared to H1 2020. Earnings per share went up 87.4% compared to 2020 figures.

A £1.3bn Eurofighter contract with Germany and £2.4bn munitions contract with the UK added to the £35.5bn order book, ensuring steady revenue into 2022.

BAE is trading at 572p with a P/E ratio below the FTSE 100 average at 10.43, and it’s offering a dividend yield of 4.3% at 23.7p per share. This shows me that the stock is slightly undervalued at the moment giving it plenty of room to grow over the next 12 months.

My concern surrounding BAE is the large net debt of £2.7bn, which could affect future revenue and share prices. Also, the defence industry is subject to governmental regulation and trade to foreign countries depends on international relationships. Despite this, I think the business has a stable cash flow, great growth potential and is an established industry leader. I would definitely add it to my list of shares to buy over Wise.

Shares to buy #2: Mondi

Packaging and paper provider Mondi (LSE: MNDI) is part of the booming e-commerce industry and is on my list of stocks to buy over Wise.

The company is on a great run in the market. Its share price has gone up 35% in the last 12 months and the H1 2021 financial report looked impressive. It was on my list of stocks to buy in July and is up 5.7% since.  

Compared to H2 2020, pre-tax profits went up 51.6% to €406m. The company added €552m to its cash reserves while expanding to growing international markets like Turkey and spending €286m in capital investments.

The paper industry is subject to increasing pulp prices and taxes. To offset this, the company launched the Mondi Action Plan 2030, a sustainability project that aims at reducing the environmental impact by reducing emissions by 34% in 2025 and 72% by 2050.

I think despite growing concerns over the sustainability and cost-effectiveness of paper packaging, the company is making strides to secure future revenue and capitalise on the changing landscape of e-commerce. This is why Mondi is on my list of shares to buy over Wise.

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

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

This cheap share fell 30% last week. I’d buy now

This huge US corporation saw its shares crash by 30% last week. But I'd buy this surprisingly cheap share now…

Read more »

Various denominations of notes in a pile
Investing Articles

These 7 shares produce passive income of 7% to 11% a year!

Passive income is extra money I make without working. By buying these seven shares, I could earn 8.9% a year…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

6.6%+ dividend yields! 2 FTSE 100 dividend stocks to buy

Finding the best dividend stocks to buy requires extra care today as soaring inflation takes a bite out of shareholder…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

At 85p, are Rolls-Royce shares a slam-dunk buy?

The Rolls-Royce share price is in penny stock territory. Roland Head explains why he thinks this FTSE 100 stalwart looks…

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

‘Big Short’ investor Michael Burry is buying this quality growth stock! Should I?

In the first quarter, Michael Burry bought more of this growth stock. Is this a hint that I should also…

Read more »

A beach at sunset where there is an inscription on the sand "Breathe Deeeply".
Investing Articles

Stock market crash: here’s why falling prices is good news

Over in the US, a stock market crash is battering high-priced stocks. But I see falling shares as an opportunity…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

These 5 FTSE 100 shares crashed in 2022. I’d buy 1 today

Although the FTSE 100 index is flat in 2022, some Footsie shares have crashed hard this year. But I see…

Read more »

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

How investors can boost their passive income when the FTSE is falling

Stock markets are plagued with fears right now. Here's why I firmly believe those fears improve our passive income prospects.

Read more »