It’d take someone far more courageous than me to help Bitcoin recover after last year’s catastrophic decline. The exercise of dip-buying has often been compared to trying to catch a falling knife, and it’s true. I’ve engaged in a few contrarian buys on the FTSE 100 while the rest of the global stock markets were selling off, and some of them sold off a little more since I piled in.
I remain confident, though, that these stocks will pay me back in spades in the years ahead. And at their price levels — many of them trading inside the considered value benchmark of 15 times or below — I considered them too cheap to miss.
Timing your trades is a true science that none of us get right all the time. That said, I think it’s obvious now is not a good time to do some bargain shopping with Bitcoin. Its 70% price decline over the past 12 months suggests the buzz around the virtual currency has been well and truly imploded. And there could be further pain in 2019 should measures to regulate the asset fall flat.
A better buy
If you’re looking to engage in a bit of dip-buying, then Footsie dividend stock St James’s Place is a much better bet, in my opinion.
Its share value has fallen more than a quarter during the past year as fears over the health of the global economy have picked up. I would consider this to be one of the best buying opportunities on the blue-chip index right now. However, the company’s now trading on a forward P/E ratio well under its historical average at 19.8 times.
Fortunately, fresh trading details released today underlined my bullishness. Despite what it described as “the particularly difficult market conditions,” fourth quarter gross inflows still clocked in at respectable £3.95bn. This was down from the corresponding October-December period a year ago, but in the context of that tough trading environment, as well as the record final quarter of 2017, the result was still impressive.
A 6%-yielding dividend star
For the whole year, St James’s Place saw gross inflows rise 8% year-on-year to £15.7bn, a result that pushed total assets under administration up 5% to £95.6bn. And the business noted today: “While challenging market conditions… will slow the pace of fund inflows from time to time, the fundamentals of our clients’ financial planning requirements remain unchanged.”
And this more or less sums up why I like St James’s Place so much. The increasing demand for financial services from ageing citizens leaves terrific sales opportunities for the business to exploit, a backdrop which it’s capitalising on by expanding its staff base (total headcount rose 8% to 3,954 advisers last year, for example).
The City expects the London business to grow profits by double-digit percentages in both 2019 and 2020 despite these challenging conditions. And this means that dividends are expected to keep rising too, meaning that St James’s Place boasts gigantic yields of 5.3% and 6.2% for this year and next, respectively. Given its rosy long-term outlook and those huge yields, I would consider the FTSE 100 star to be a much more sensible buy than Bitcoin right now.
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Royston Wild 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.