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Investors have the potential to earn market-beating returns over the long term by purchasing value stocks. Today, I think there are many companies trading at bargain prices.
I've been looking through the FTSE during the last few weeks. I see a lot of cheap stocks that I think could make important additions to my portfolio.
My plan
My plan is pretty simple. I want to buy stocks that I think seem undervalued today and hold them for as long as possible.
Whether we are in a bull or bear market, I have no intention of deviating from my goals. I have a term of 30 years. I am aware that I will experience bouts of volatility during it. I'm happy with that being the case while I focus on the bigger picture.
A smart time to buy
With my plan in place, I think now might be a good time to buy.
The last few years have been incredibly challenging for retail investors. But I like to keep a positive attitude. I think we could, fingers crossed, get closer to the end.
As the year progresses, I am optimistic that we may see an increase in investor confidence. This, in turn, should push up share prices.
Interest rates will begin to decline from the current base rate of 5.25%. There are even some predictions that it will be 3% by the end of 2025. Inflation will also continue to fall closer to the 2% target set by the Bank of England. Although it may not seem like it, I believe there is light at the end of the tunnel.
one I'm looking at
But which companies will benefit from this? A potential candidate is JD Sports Fashion (LSE: JD).
If you had bought shares of the retail giant at the beginning of the year, you would have a 26.6% paper loss. Luckily I didn't. But now I think his involvement may be too cheap to ignore.
Today, it trades with a forward price-earnings ratio just below nine. To me, that looks cheap.
JD is a leader in the retail sector. And it continues to expand. Last year it opened more than 200 new stores, including several flagship locations. It has injected greater investments into supply chains. The company also has a healthy balance sheet.
Its share price has struggled as it has faced numerous challenges recently. A profit warning in January sent it tumbling. As inflation hits consumers' wallets, one could argue that the last thing they will do is spend money on new goods.
But should this worry an investor like me? The stock has taken a hit. But I'm confident it can work in the long run. Consumers may not be willing to spend right now. However, premium sports products have been gaining popularity and are expected to continue to do so.
I think there is a lot of room for recovery with JD. If I had some extra money, I would buy some stocks.
