The Motley Fool

The Bitcoin price is booming but I’m buying cheap UK shares for the next bull market

Image source: Getty Images

The Bitcoin price is booming. Last Tuesday, the price of a single coin was over $19,000. Anyone who picked up some of the cryptocurrency back in March would be sitting on a gain of roughly 200%. 

As a Bitcoin sceptic, am I bothered about missing out? Not in the slightest. Let’s quickly look at some of its ‘qualities’.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

  • Bitcoin generates no revenue or profits. Its price is wholly dependent on what someone will pay for it.
  • Bitcoin doesn’t pay out any dividends for those that own it. 
  • Bitcoin ‘wallets’ are regularly hacked and emptied.
  • Bitcoin’s price is highly volatile.
  • Bitcoin still hasn’t been widely adopted. Very few people actually use it. 

You might say, “What does it matter? Profits are profits!” You’d be right. Then again, I’m a Foolish investor. I’m looking to grow my wealth through investing not speculation. In other words, I pay attention to risk. 

And, let’s be clear, the Bitcoin price could still go very wrong from here. Recall that it fell from almost $20,000 in December 2017 to a little over $3,000 a year later. The possibility of it happening again is why I’m more comfortable buying shares in quality UK-listed companies instead.

A better bet than Bitcoin

One position I’ve been adding to in November has been my holding in laser-guided equipment manufacturer Somero Enterprises (LSE: SOM). I thought the shares were a steal back in September and this month’s update supports that view.

Thanks to “an active US market” and“strong contributions from new products”, Somero now expects to exceed its previous guidance for FY20. Revenue is now likely to come at $80m rather than $75m. At $26m, the amount of net cash on its balance sheet is also predicted to be higher. As a holder, this is exactly what I want to hear. 

Somero’s share price has almost doubled since hitting a low in March. That’s clearly not as good as the rise in the Bitcoin price but I don’t care. The former’s valuation has grown because the business is recovering. In other words, there’s substance behind recent gains.

What’s more, the shares still look cheap on 11 times earnings. Factor in big dividends, high margins and stellar returns on capital employed (ROCE) and Bitcoin can’t compete with Somero’s quality.

Recovery in sight

Another small-cap UK share I’ve bought more of in November is tableware supplier Churchill China (LSE: CHH). Like Somero, it’s share price has also rebounded since March’s low. In fact, it’s soared almost 80%!

Despite this, I’m not expecting the numbers in its next update to be quite so impressive. Two lockdowns have been a nightmare for the hospitality and leisure industries. A return to the tier system next month is unlikely to make things much easier for restaurants, bars, and hotels — Churchill’s main customers. 

Nevertheless, the recent flood of news surrounding promising coronavirus vaccines makes me bullish on the Stoke-On-Trent-based business recovering over time. Scoring well on quality metrics, Churchill is also a prudently managed company with net cash on its balance sheet. Once the pandemic has passed, I think we could see the share price getting back to previous highs. It’s still roughly 35% below where it was in February.

Keep your wobbly Bitcoin price. A slow(er) but sustainable rise in wealth is what I’m looking for.

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Paul Summers owns shares of Churchill China and Somero Enterprises, Inc. The Motley Fool UK has recommended Churchill China and Somero Enterprises, Inc. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.