Gold and Bitcoin’s recent price performance might suggest these assets could produce attractive returns for investors. However, over the long term, the numbers show equities have yielded much better returns.
As such, if you’re thinking about buying gold and Bitcoin for your portfolio, it might be worth looking around to see if there are stocks that offer better risk-reward profiles. Here are two companies that might do just that.
Global commodities group Glencore (LSE: GLEN) is hardly a market darling. The company has been beset by corruption scandals and volatile earnings over the past few years. Nevertheless, it remains a vital part of the global economy. This is unlikely to change any time soon.
As the world’s largest commodities trader, Glencore has a unique edge. Commodity trading is low margin and requires lots of volume to make a decent profit. The group’s scale gives it this advantage.
Therefore, unless Glencore suffers a significant setback that stops the group from trading, it seems as if the company will remain at the head of the global commodity market for many years to come.
The stock currently supports a dividend yield of 5.8% and trades and a 2020 price-to-earnings (P/E) ratio of 13.7. This suggests the shares offer a wide margin of safety.
As a result, compared to gold and Bitcoin, Glencore looks both cheaper and offers a better level of income. It also seems like the company offers a better capital growth outlook as earnings should continue to expand in line with global economic growth.
Recent trading updates from B&Q owner, Kingfisher (LSE: KGF), show the company is struggling for direction. However, its new management team has a plan to get a grip on the situation.
Shortly after taking over the helm of the business in the second half of 2019, Kingfisher’s new CEO, Thierry Garnier, declared the company is trying to do too much in too many markets. As a result, it looks as if he’s now planning to slim down the group.
France has been a particularly tricky market for Kingfisher’s recently, although its UK businesses have been growing. Trade-focused Screwfix saw sales rise by 3.7% in the second half of the group’s financial year. Consequently, these numbers seem to suggest the company could look to spin off its underperforming divisions. This would allow management to focus on the most profitable parts of the group.
As such, the stock seems to present an attractive opportunity for value seekers at current levels. It’s currently dealing at a P/E ratio of 10.4. Moreover, Kingfisher offers a dividend yield of 5.1%. The payout is covered 1.9 times by earning per share.
These metrics seemed to infer that shares in a retailer offer a wide margin of safety at current levels. Therefore, now could be an excellent time for investors to make the most of this discounted retail opportunity.
Don’t miss our special stock presentation.
It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.
They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.
That’s why they’re referring to it as the FTSE’s ‘double agent’.
Because they believe it’s working both with the market… And against it.
To find out why we think you should add it to your portfolio today…
Rupert Hargreaves owns no share 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.