2022 is going to be a year of rising costs and rising interest rates if the experts are correct. This means I am looking for stocks to invest in that could actively benefit from meeting these specific criteria. I think I have found at least one. Pleasingly, I think it is a dividend stock with growth potential.
The stock I am referring to is Moneysupermarket.com (LSE:MONY). I expect it to make something of a comeback in 2022. For my money, Moneysupermarket.com has the makings of a solid long-term investment for my portfolio. Let me explain my thinking.
Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!
Growth has stuttered
The company has found things tough over the past 12 months. According to its most recent financial statement in October, revenue was down 11% year to date compared to the corresponding period in 2021. Obviously, this was not good.
It goes a long way towards explaining why the share price has been trading so low. Investor sentiment has cooled, with the stock at almost half the price it was three years ago.
That’s the bad news. The good news is that the firm has taken steps to address this.
Proven model and new advertising
The price comparison model is one long proven to work. If consumers want to save money on household or financial products, they know a visit to a price comparison website should help them do that.
So, to compete, this means Moneysupermarket.com need to shout louder than its major rivals, such as Go Compare and Compare The Market, in order to grab increased share of wallet.
The Moneysupermarket.com brand was relaunched last autumn with a well-received advertising campaign. The fact that it identified the need to reposition its brand demonstrates customer-centric awareness and a willingness to respond to changes in a competitive market. Taking steps to make the brand more competitive is only a good thing.
It remains a good dividend stock
While it’s good to see Moneysupermarket.com actively changing its advertising to be more competitive, I don’t think this is going to be the key driver of rising revenue. I think increased revenue will come from increasing numbers of consumers switching financial products more readily in 2022. The changes to advertising kick-start this, in my view.
Why do I think this? Well, I expect consumers to spend more money throughout the year on the things they want to enjoy, in very general terms, simply because I expect the Covid-19 shackles to come off. I believe there is going to bean increased desire to save money on the boring things in life, such as utility bills, in order to free up funds for more ‘adventurous’ spend, such as holidays. This will be especially the case if inflation takes hold and household energy costs continue to rise. Don’t get me wrong, it is only a personal hypothesis, but one that I think stands up to scrutiny bearing in mind the last two years.
Moneysupermarket.com look in decent shape financially, so I do not have any concerns on that score. To cap it off, the company remains a good-looking dividend stock, with an expected dividend yield of around 5.3%. All in all I have warmed to this stock. I think it could be a shrewd longer-term investment for my portfolio.