I don’t need to spend a fortune in order to make a great return with UK shares. With regular investment I’ve built a stocks portfolio that’s performing well, comprising companies from the FTSE 100 and further afield. The key is setting a savings target (say for each month) and sticking to it.
Let’s say that I have £500 to invest in UK shares each month. Over the space of 30 years I could expect to have made as much as £704,000. That’s based on studies that show stock investing provides an average annual return of 8% over a long-time horizon (like a decade or more).
This sort of sum, isn’t guaranteed, of course. But if I achieve it, combined with the State Pension, it could help me live a very comfortable retirement.
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3 FTSE 100 stocks I’d buy
I think now is a good time to go stocks shopping too. That’s because bouts of intense selling in recent months leave a lot of UK shares trading at bargain-basement levels. Here are three cheap FTSE 100 stocks I’d buy today.
Copper corker
Mounting concerns over China’s economy have weighed on Antofagasta’s share price since late spring. It’s something that investors need to take seriously given the fact China sucks up more than half of the world’s copper. But I think it could be argued that this risk is baked into the firm’s rock-bottom valuation.
As a long-term investor I’m attracted by Antofagasta’s share price. At around £14.10, the miner trades on a forward price-to-earnings (PEG) ratio of just 0.1. I think this could make it a steal given the electrifying rate at which copper demand is expected to rise as investment in green technology (from wind turbines to electric vehicles) balloons.
In the fast lane
I also believe Auto Trader Group could be too cheap for me to miss at the current price of 605p. This FTSE 100 share also trades below the widely-regarded PEG bargain watermark of 1, at 0.3. I don’t think this forward PEG ratio reflects the growth potential of the online car listings business as e-commerce takes off. And it’s well placed to exploit rocketing used car demand as parts shortages hit new auto production.
Overall car demand could suffer if petrol and diesel prices continue to soar (the latter hit record peaks near 150p a litre over the weekend). However, it’s my opinion that Auto Trader’s low valuation already reflects this threat.
Bank on it
I’m also tempted to buy HSBC Holdings today. That’s even though China’s economic cooldown threatens to hit revenues, and the country’s embattled construction sector poses an even-more specific industry risk. The bank’s forward price-to-earnings (P/E) ratio of 9 times, combined with its 4% dividend yield, provide extremely decent value at the current share price of 445p.
I expect HSBC’s focus on Asia to provide terrific long-term returns. A fast-growing middle class in China and the surrounding territories is supercharging demand for financial products. And HSBC has the clout and the brand recognition to make the most of this opportunity.
