There’s a wide variety of cheap shares available right now that investors should consider buying and holding for the decades ahead. At least, that’s what I’m doing.
When it comes to building wealth, I plan to follow in the footsteps of Warren Buffett. He aims to buy undervalued shares and hold them for years. Looking at his track record, it’s hard to argue against this method.
To put it bluntly, the previous few years have not been kind to investors. We’ve experienced a global pandemic, inflation levels not seen for years, armed conflicts, and soaring energy prices, to name a few things. But that won’t stop me.
Slow and steady
The reason it won’t deter me is because like all my colleagues here at The Motley Fool, I invest for the long term. Across a host of sectors and companies, stock market returns haven’t been the best in 2023. For example, the FTSE 100 is up less than 2% year to date. However, the market has shown over time the best way to reap its rewards is by thinking in years and ignoring short-term volatility. The Footsie may not have posted a strong performance in 2023, but since its inception it has returned around 7% on average.
Of course, there’s the argument to be made that I should put my money into a savings account. With interest rates above 5%, there’s the potential for me to make some solid returns risk-free. But by leaving my money in the bank, I’m missing out on growth opportunities. On top of that, when interest rates fall again, so will the interest I earn.
What I’d target
It’s all well and good for me to say this. But I need to put my money where my mouth is. So, what stocks would I consider?
Well, one company I’m watching closely is BP (LSE: BP).
To start, the stock boasts a low valuation. With a price-to-earnings (P/E) ratio of just four, this signals it could be undervalued. Comparing it to peers such as Shell, which has a P/E ratio of seven, makes it look even cheaper.
It has made a resurgence since the pandemic and analysts forecast it to continue with this. JP Morgan has a 550p price target on the stock. Back in September, Barclays placed a 1,000p target on the BP share price.
There are a few issues that could harm the firm moving forward. The most obvious of these is the transition to renewable energy. The company is heavily dependent on traditional oil products. As the world transitions to a greener future, it’s yet to be seen how this will impact the company.
That said, it’ll be some time before we see the oil and gas industry die out. So, I think for the years ahead BP shouldn’t be impacted too much. Moreover, it has made progress in its sustainability integration plan. This includes moves such as its recent acquisition of a majority stake in Lightsource, a European solar developer.
With the dividend yield above the Footsie average, I’m further drawn to opening a position. In 2024, If I have some spare cash, its stocks like BP I’ll be looking to buy and hold for the years to come.
The post I’m buying cheap shares in 2024 and holding them for the years to come appeared first on The Motley Fool UK.
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More reading
2 reasons to be positive on the BP share price in 2024
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If I’d invested £1,000 when the BP share price hit rock bottom, here’s what I’d have now!
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
