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Investing doesn’t have to be complicated. In fact, I find that some of the best stocks to buy are the ones that don’t require hours and hours of complicated research to understand.
simple but special
takeaway food retailer greggs (LSE: GRG) is, in my opinion, a great example of a company with an easy to understand business plan. In short, the FTSE 250 The member sells home-baked goodies from over 2,300 stores across the UK.
As basic as it sounds, Greggs has been a real winner for shareholders over the years. I know, because I am one of them.
The inevitable short-term swings aside, the price continues to rise, thanks to the company’s ability to consistently grow profits, exploit new opportunities (vegan sausage rolls), and generate excellent returns on the money it invests.
in a row
Based on your most recent update, I would have no problem increasing my position today if I had the money to do so.
Recent full-year figures revealed that total sales rose 23% in 2022. Despite being hit by higher ingredient, labor and energy costs, pre-tax profit also rose 1.9%. .
The fact that Greggs can report such numbers during an economic downturn is further proof that a company doesn’t necessarily need to do anything innovative to get it right.
Offering good value for money is enough for your customers. And it’s good enough for me as an investor.
an inconvenience
Unfortunately, a lot of this good news seems to be reflected in the valuation. Greggs shares are now trading at 23 times forecast earnings.
Of course, there’s no rule that says stocks can’t go higher. Regardless, I’d rather have something with products that are almost guaranteed to remain popular than the latest darling tech whose products I have a hard time understanding, let alone wanting.
building wealth
Naturally, it pays to stay diversified, no matter how simple the businesses I own. It wouldn’t be particularly wise for my portfolio to include only fast food retailers and nothing else.
That’s why I also like home builders listed as taylor wimpey (LSE:TW) right now.
Clearly owning a slice of one of the UK’s big players hasn’t been easy over the past six months or so. Skyrocketing interest rates have hammered demand and sent myopic investors racing for the exits.
However, all of this plays squarely into the hands of those like me who, after purchasing, are willing to sit on their hands for years.
patience is required
That time horizon is important because, any way you look at it, the UK needs more housing than it currently has. with his valuable land bank, this will serve as a major tailwind for Taylor Wimpey. And that makes this sector quite easy to understand and one that I am willing to buy a piece of before the markets rally.
Right now, I can pick up the shares for 12 times the earnings. I suspect that any indication of a reduction in interest rates could send them down rather quickly.
On top of this, the shares are currently yielding 7.5% based on analyst estimates of how much cash the company will return to holders this fiscal year. For perspective, that’s more than double the performance of the FTSE 100 index as a whole.
I am very tempted to add Taylor Wimpey to my portfolio when funds become available.
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