I think that within the FTSE 100 and FTSE 250 there’s an abundance of cheap shares available for investors to consider right now.
My plan is to buy some undervalued stocks and hold them for the years to come. By doing this, I’m following in the footsteps of successful investors such as Warren Buffett.
2023, like the few years before, was another challenging spell for retail investors. And while we’ll be looking to catch a break, I’m not sure 2024 will be much easier. We’re probably staring another 12 months of volatility in the face. As it’s proved over time, the stock market is unpredictable.
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But not to worry. In fact, I’m keeping my head up and searching for investment opportunities. As Buffett once said: “When it rains gold, put out the bucket, not the thimble.”
Stock market returns
There are ample reasons that could deter me from investing in the market in 2024. But there’s one main reason that I ignore all that. And that’s because I play the long game.
Last year, the FTSE 100 returned a measly 2%. In 2022, it returned less than a single percent. They’re far from thrilling returns. Yet despite that, I plan to have my money tied up in the stock market for as long as possible.
That’s because time and time again the market has proven that the most effective way to reap its rewards is to invest for the long run. As such, I think in years and decades, not weeks and months. Since its inception back in the 1980s, the UK’s leading index has returned 7% on average every year. That’s more like it.
There’s always the option of leaving my cash in the bank. In fairness, I could get a relatively attractive return right now given high interest rates. But by leaving my cash stagnant, I’m missing out on the growth opportunities the stock market provides. What’s more, when interest rates fall, so will the interest I earn.
What I’d buy
With that in mind, one stock I think looks good value is BP (LSE: BP).
Last year saw the BP share price fall slightly, closing at around 466p. To me, with a price-to-earnings ratio of just 4.2, it looks incredibly cheap. It also yields 4.9%, which would provide me with a tidy amount of passive income.
There’s an elephant in the room, of course. That’s the energy transition. BP relies on traditional products like oil. As we continue to push forward to a greener future, there’s the potential that the firm gets left behind. Nowadays, ESG (environmental, social, and governance) investors won’t even entertain the idea of owning stocks such as BP.
However, I’m quite sure it’ll be some time before the oil and gas industry dies out. For the years to come, I think BP will be safe. On top of that, it also has a sustainability integration plan that it’s made headway with. This includes initiatives such as increasing its global investment in lower-carbon, convenience stores and power trading businesses from 3% of its annual investment budget in 2019 to over 30% of it today.
With some spare cash, I’d happily buy BP. In 2024, it’s stocks like this I’ll be targeting to buy now and hold for the years ahead.
