No savings? No worries

Many Britons have no savings at 30. But while it may be common, it doesn’t mean it’s happy situation to be in. Conventional wisdom tells us we should have enough savings for at least six months. Beyond building a small reserve, many of us want to build wealth, and investing regularly and over a sustained period of time, is one of the best and most popular ways of doing it.

Thankfully, Britons start can investing with very little money at all. Investors could look to put aside as little as £50 a month from our salaries in order to get started. Or if an investing were willing to make cutbacks in other parts of our lives — such as a daily coffee out — that £50 figure could be expanded upon.

Here’s a graph showing how £200 monthly contributions compound over 30 years at annual rates of 5%, 10%, and 15%. The differences in growth become more pronounced over time due to the power of compounding, with the higher rate reaching £1.4m.

Buffett’s golden rule

So, what does this have to do with Warren Buffett? Well, it’s simply about how we invest. Many novice investors lose money chasing big returns. And that’s why Buffett’s first rule of investing is “don’t lose money”. The thing is, if an investors makes a poor investment decision and the value of that asset — stock — goes down 50%, the investment has to go 100% up to get back to where it started.

It’s certainly easier said than done — don’t lose money. However, it underscores the need to make researched investment decisions and not simply follow our gut or even the crowd. This could mean using quantitative models to build a rationale for our investments.

A strong investment to consider?

One stock potentially worthy of consideration is Blue Bird Corporation (NASDAQ:BLBD). The American company is a leading designer and manufacturer of school buses in North America. And it has benefitted from the electrification agenda, supported by federal subsidies.

Some recent pullback in the share price may be associated with President-elect Donald Trump’s likely repeal of the clean energy/ EV provisions in the Inflation Reduction Act. This does create some risks for shareholders.

However, the company boasts a strong backlog of orders, a robust balance sheet, and impressive profitability grades. Moreover, the valuation data is highly attractive. The stock is trading at 9.7 times forward earnings and has a price-to-earnings-to-growth (PEG) ratio of 0.77. It’s also a brand that customers know, having been founded in 1927. That counts for a lot sometimes.

Those considering it should bear in mind that buying US stocks will mean that their investments are also subject to exchange rate fluctuations. Moreover, they’ll need to apply for a W8-BEN which will allow them to buy and trade US-listed stocks. This needs updating periodically but it’s still simple and I don’t think it should put anyone off US investing.

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I’m sorry to say it, but we need to take our time, and invest in the right stocks to make our portfolios grow. So, here are two explosive stocks I’d buy today to build a bigger portfolio and generate a life-changing passive income in the future.

Have I missed the bus?

Blue Bird Corporation (NASDAQ:BLBD) is an American school bus maker, and it’s riding high on a wave of orders for its new electric buses. The stock is actually up 95.7% over the past 12 months, with a recent earnings beat attracting investor attention.

Currently, electric buses only make up a small proportion of the company’s total output. Management stated that the current order backlog is for 5,900 vehicles — worth $850m — but only 8% of these are electric.

However, the electric market is growing — big time. In Q2, electric vehicles (EVs) represented 9% of its total sales, versus 6% a year ago. “In Q2, EV bookings increased by 56% over last year as we sold a quarter record of 210 electric school buses,” management said in the earnings call.

This growing EV market has been driven by the Environment Protection Agency’s Clean School Bus program. While I’m not a fan of subsidies — they can make companies inefficient over the long run — the state’s $5bn of funding appears to be driving the transition to electric buses.

I do genuinely see subsidies as a risk, because when they go in 2026, companies have to be ready to go it alone. However, that doesn’t undermine the strength of the investment opportunity. Blue Bird is currently trading at 20.5 times forward earnings and has a price-to-earnings growth ratio of 0.64 — that’s so cheap!

A future e-commerce giant

GigaCloud Technology (NASDAQ:GCT) has nothing to do with cloud technology as the name might suggest. Rather misleadingly, it’s a company that connects large parcel — furniture — manufacturers in Asia with buyers and resellers in North America and Europe. It also provides the logistics.

The company’s lean business model and platform have proven very successful over the past 18 months. In its Q1 earnings call, the business highlighted that gross merchandise value had surged to $908m, representing a 64% increase over 12 months.

Moreover, the number of active third-party sellers grew by nearly 44%, reaching a total of 865 by the end of the quarter, while the number of active buyers increased by over 29%, reaching 5,493 for the trailing 12 months.

I think it’s worthwhile recognising that most of GigaCloud’s sellers appear to be in China, and that represents a risk in the current geopolitical environment. However, GigaCloud’s value proposition remains highly attractive, especially with its forward price-to-earnings ratio of just 10.7 times.

The passive income story

If I invest in companies that grow my portfolio between 10% and 15% annually, rather than 5% and 10%, I can achieve my passive income dreams sooner. However, it’s not about taking risks. It’s about making data-driven decisions.

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