Choosing between investing directly in real estate and FTSE shares isn’t difficult for me. If I were forced to pick between the two, I’d go with the latter every time. There’s no denying that owning rental properties can be immensely profitable. But it entails a lot of work dealing with the tenants and maintenance, not to mention the initial massive upfront cost of buying a house in the first place.
Investing in the UK’s leading stocks also has its caveats. But it’s a far more passive process for long-term investors and doesn’t require anywhere near as much capital to get the ball rolling. So, with that in mind, what are the best FTSE stocks to buy right now?
Why invest in UK shares?
Across the pond, the stock market has made a pretty stellar comeback. Looking at the S&P 500 and Nasdaq 100, these US indices are up 21.5% and 43.7% over the last 12 months, respectively! After two years of horrendous performance, there’s no denying it’s a welcoming sight, especially for growth investors. Yet, here in the UK, we haven’t been so fortunate.
Looking at our two flagship indices, the FTSE 100 and FTSE 250, are actually down by around 5% over the same period. Of course, this doesn’t capture the effects of dividends. But even when taking shareholder rewards into consideration, it doesn’t come close to what US stocks have achieved.
Does that mean investors should start investing internationally? Owning US stocks can be a powerful bonus to portfolio diversification. However, it’s important to remember that past performance doesn’t predict future returns. And when looking closer at UK stocks, a recurring theme appears to be emerging – they’re cheap. And investing in the best businesses at dirt-cheap prices is one of the best ways to build substantial wealth in the long run.
A top pick for 2024?
Looking at the FTSE All Share index, investors have over 600 companies to choose from. Sadly, only a few of these are going to be winners. And I think B&M European Value Retail (LSE:BME) could be one of them. The discount retailer has proven increasingly popular among shoppers as it provides relief against the cost-of-living crisis through cheaper products versus larger grocery stores such as Tesco.
However, what makes the company stand out is its industry-leading margins. Despite most retailers barely being able to generate an operating profit beyond 5%, B&M is currently reaping almost 11%! That’s turned it into a cash-generating machine capable of funding its international expansion into France, which is growing like a weed when looking at the latest results.
Of course, the firm isn’t without its risks. B&M isn’t the only discount retailer out there and often finds itself competing on price with the likes of Aldi and Lidl. Too much pressure could start chipping away at its chunky margins, eventually putting an end to its leading status.
Yet, even with this risk in mind, management has a knack for adapting and navigating the shifting retail landscape. That’s why I intend to add this business to my portfolio once I have more capital at hand.