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I'm sure everyone has different opinions about the best stocks to buy for their ideal holding pot.
My own, B&M Value Europe (LSE: BME) and National Grid (LSE: NG.) are two options that I think can help me build wealth.
Here's why I would love to buy them the next time I have some free money.
Discount on consumer goods
The retail price segment has exploded in recent years, and B&M has been at the forefront of this. I FTSE 100 The participant received exceptional growth in all performance, income, and attendance. In context, sales have increased nearly 170% over the past eight years!
In recent times, the cost of living crisis caused by inflation and high interest rates has helped the business rise to the top. This is because consumers want more bang for their buck. B&M took advantage of the opportunity to develop its presence, through the acquisition of the now defunct Wilko sites, to provide an example of how the business has made money.
Interestingly, B&M shares have fallen recently, due to what I believe to be overreaction. The June full year report confirmed that operating profit was up 10.9% compared to last year. Also, like-for-like earnings across its core UK business rose by around 4%. However, the business did not disclose much information about next year's guidance.
B&M continues to grow strongly, and is targeting 1,200 stores, compared to its current location of 755 stores. However, the threat of competition from supermarkets that are working hard to expand their own core categories to target the wallet-conscious consumer can impact profits and returns.
Getting into the fundamentals, the decline in B&M shares provides a good entry point right now, with shares trading at a price-to-earnings ratio of just 12. Also, the 3.2% dividend yield could grow in the future. However, I understand that benefits are not guaranteed.
Keeping the lights on
National Grid is in charge of making sure we all have the power we need.
The draw to buying shares in National Grid is that it is the only game in town, as there is no competitor. This ensures that the income remains stable. Also, the stock has defensive features as everyone needs energy regardless of the economic outlook.
It is worth noting that National Grid has long been a Dividend Aristocrat. The dividend yield today is less than 6%. However, recent examples of gains have not proven to hurt stocks. The company said it needed to cut dividends to balance the books and invest in infrastructure. In addition, it needs to prepare other green energy options. This is dangerous going forward as well. However, I think that once the business has made the necessary investments, the rewards will outweigh the blip of the dividend cut.
The good news is that National Grid shares are falling which means they are cheap to buy for me. They trade at a price-to-earnings ratio of just 10.
As with all investments, there are ups and downs. I think the reduction in profits is a temporary, short-term measure. Over time, I think the rewards from this strategy can help build wealth.
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