Rather than dismiss me as some irksome Scrooge out to steal any sense of joy from the festive period, l implore you to keep reading. Your future (far richer) self may thank you for doing so.

National Lottery draw: The awful odds

To begin with, let’s look at some facts. Your chances of having the winning Lotto ticket by picking the correct six numbers are 1 in a little over 45m. To put things in perspective, you have a better chance of being struck and killed by lightning in the UK (1 in 19m). 

Even just matching three numbers isn’t easy. Only 1 in 97 tickets manages this feat. And the prize for all that good fortune? £30.  

What’s the harm?

Now, don’t get me wrong. I’m not for a minute suggesting people don’t know what they’re doing. While most of us won’t know the exact odds of winning mentioned above, we’re sensible enough to appreciate the chances are slim to exceptionally slim.

There is, of course, nothing inherently wrong with a one-time flutter at Christmas either. Just dreaming about what one could do with £15m is nice enough, particularly after the horrific year that 2020 has been. 

No, the problem comes from repeatedly buying tickets. And given that many people will be feeling the pinch in 2021, due to Brexit and Covid-19, it’s quite possible some will get into the habit of doing so to increase their chances of striking it rich.  

This habit could get very expensive. Right now, entering the main National Lottery draw costs £2 per line. Let’s say a person regularly plays five ‘lines’ twice a week, every week. Over the course of a year, that comes to a staggering £1,040.

I think there’s a far better route to riches.

UK shares are a better bet

Given the choice, I’d always invest that £1,040 in the best UK shares I can find over participating in the National Lottery draw. There are a couple of big reasons for this.

First, shares are more likely to make people rich than the Lotto ever will, albeit at a slower rate. History shows that stock market returns trump every other asset over the long term.

Remember that £1,040? If I were to invest this amount in the stock market in one go and generate a quite reasonable 7% annual return for 30 years, I’d have almost £8,000 at the end. If I managed to make a 10% return, I’d have a little over £18,000. Sure, there will be ups and downs along the way, but the end result is surely worth holding for.

Don’t forget, this example is based solely on the money that could have been spent gambling in a single year. Think how much better the outcome could be if I put even more money to work. 

A second reason is that, right now, many London-listed stocks are still far too cheap. As seasoned investors will attest, the very best time to buy shares is when they are hated. Pick well, and the Christmas flutter you do have on a National Lottery draw will be irrelevant.

The post Forget the National Lottery draw. I think UK shares are a better way to get rich! appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

The opportunity

Anglo Pacific is a mining company that doesn’t do any mining. That may sound odd at first, but it’s actually quite brilliant. The firm provides funding for other mining businesses – like Rio Tinto and BHP Group – to develop and operate new sites in exchange for royalties in the form of minerals dug up from the ground.

I’ve previously explored how Anglo Pacific’s unique business model creates extraordinary levels of profitability within an industry that has virtually no pricing power. Since then, two new pieces of information have been released – third-quarter earnings, and an exciting announcement for shareholders.

The earnings report mostly followed expectations, with a slight decline in royalty revenue from £6m to £5.7m. This reduction hardly good news. However, the cause is mainly due to a longwall change out at the Kestrel mine in Australia.

Put simply, the mine was extended and fourth quarter royalties are expected to see an increase in production.

Another change out is planned for Q3 2021. It is expected to cause a similar level of disruption but once again, will further increase the production of the site.

A more impressive result is that two sites extracting uranium and vanadium saw a triple percentage growth of 117% and 131%, respectively. Despite the massive disruptions from Covid-19, both minerals – in addition to copper and iron – are reaching multi-year highs in value.

Share buyback scheme

Beyond earnings, it successfully completed a £5m share buyback scheme. As a reminder, share buybacks are an alternative to dividends, as a method of returning profits to shareholders. Buying back shares reduces the number of shares available on the market and thus increases the value for existing shareholders.

Therefore, since Anglo Pacific has around 180m shares outstanding, the firm indirectly paid a dividend 2.8p per share. This is in addition to the direct dividend payments of 1.75p due on 13th November 2020 and 17th February 2021.

At the current stock price of £1.03, collectively these payments represent a 6.1% return on investment over the next three months.

The bottom line

The closure of mines back in March had a significant impact on operations. As such, the stock is unlikely to achieve its historical double-digit growth this year. However, the performance loss is not due to a problem with the company but rather a pandemic that affected the entire world.

Of course, this is only my opinion. But it also appears to be similar to the views of the management team. Several of the board members – including CEO Julian Treger – have been buying up shares over the past month.

In light of all this new information combined with an incredibly attractive share price, I have doubled my stake in the business in my attempt to get rich.

The post How I’d invest £1,000 today and get rich appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Zaven Boyrazian owns shares in Anglo Pacific. The Motley Fool UK has recommended Anglo Pacific. 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.

So, what is this company, and can it still make you money? Read on for my take.

What does Best of the Best do?

Best of the Best has been around since 1999. Up until recently, it was best-known for running competitions in shopping centres and airports. Those buying a ticket stood a chance of winning the rather nice car on display.

These days, however, everything the company does is online. This is understandable when you consider just how many more competitions it can run (and people it can target) via this medium.

Its new business model also means the AIM-listed company is no longer burdened with a high-cost retail estate and can funnel what it saves into things like marketing instead.

Why are the shares flying?

So why is the business continuing to perform so well?  A couple of reasons.

First, recent trading has been very encouraging. In last week’s full-year results, Best of the Best reported a 20.1% rise in revenue to £17.8m in the 12 months to the end of April. Pre-tax profit pretty much doubled to £4.2m. 

With numbers like these, it’s perhaps no surprise that the market minnow has decided to shower cash on its owners. A total dividend of 3p per share — up 50% from 2019 — is due in October. Even better, a special dividend of 20p per share is coming in July!

The second reason follows on from the first. Since releasing these numbers to the market, BOTB’s management claims to have received “very preliminary expressions of interest which could potentially lead to an offer or offers being made” for Best of the Best.

With a ‘formal sale process’ to engage with potential suitors now set up, the company could be snapped up in short order.

Can you still make money?

The huge rise seen in the share price clearly goes some way to reflecting recent trading and the potential sale. As such, gains are unlikely to be as great going forwards. 

Moreover, there can be no guarantees of an offer being submitted. And even if one is forthcoming, holders may believe it doesn’t accurately reflect the true value of the company.  

Another thing worth pointing out to potential buyers is the exceptionally low free-float. With just 17% of the company’s shares available to investors in the market, it only takes a few sell orders to send the share price tumbling. This could easily happen if enough want to bank profits, or we get another general market crash. 

That said, the outlook for this business is undeniably encouraging, even if an offer isn’t forthcoming. Recent buoyant trading has apparently continued post-period end and management expectations continue to be exceeded.

The £130m-cap also scores highly on quality metrics. Margins and returns on capital employed are high, there’s £5.21m in cash on the balance sheet, and there’s no debt. If I were going to invest now, this is what I’d be focusing on. 

Best of the Best still has the potential to make money for new investors, I feel. Just don’t rely on a takeover to be the reason.

The post Up almost 300% since the market crash, are Best of the Best shares still a buy? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Can the company continue this positive momentum and help new investors grow their wealth? Despite being proven wrong in the past, I’m still to be convinced.

“Unprecedented demand”

The grocery sector has, of course, been one of the few to thrive during this pandemic. It comes as no surprise then that Ocado announced today it had experienced “unprecedented demand” over recent weeks and that it was now delivering “significantly more groceries to households than ever before.” 

Without doubt, today’s numbers were excellent. Revenue growth in its retail arm in Q2-to-date was a little over 40% higher on the previous year. It was also almost 30% higher than in Q1.

Although sensing that normal shopping habits had returned, the growth stock said the number of items in customers’ baskets was still high. That said, it did caution investors that the near-term outlook remained cloudy. Since no one knows how long it will take for life to return to normal, management chose to suspend its guidance on retail revenue for the current financial year. 

Growth stock

Of course, Ocado is more than just an online supermarket. It’s Solutions arm is the reason many investors hold the growth stock. Through its Smart Platform, the company is able to offer infrastructure and software solutions to grocery firms around the world. Giants such as Kroger and Coles Supermarkets are already on board. So too is the UK’s fourth-biggest supermarket Morrisons. 

On this front, there was more good news. Despite the pandemic, the company reported delivering its first international customer fulfillment centres (CFCs) to French firm Groupe Casino and Canadian retailer Sobeys on time. It added that it was not experiencing any material delays in terms of delivering further facilities to other customers.  

So, was I wrong about Ocado?

I have no hesitation in holding my hand up and declaring that — purely from a share price perspective — my call on Ocado was wrong. It’s done very well for investors and I’m not one of them.

So, has my opinion on the company changed? Not really. 

From a valuation perspective, Ocado still looks faintly ridiculous. Yes, it has market-leading technology (although it’s worth noting that its website couldn’t cope with demand in March). Yes, it has £1.2bn of cash on its balance sheet. And, yes, online grocery retailing is the future. But, with a market-cap approaching £12bn, how much of this is priced in? I’d say a lot (and then some).

Aside from the fact it’s still to make a profit, Ocado must also contend with the possibility that a free-falling global economy will have an impact on how much people are able/willing to spend on groceries going forward. In this scenario, it’s surely the German discounters Aldi and Lidl that will benefit, not new joint venture partner Marks & Spencer. 

As positive as today’s update was, I certainly wouldn’t want to be caught owning the shares if everything didn’t proceed perfectly. And, as we know, it pays to expect the unexpected when investing, particularly in 2020.

Good luck to all new holders. But I think there are less risky ways to make money in the FTSE 100 right now.

The post Can FTSE 100 growth stock Ocado still make you rich? appeared first on The Twelfth Magpie.

More reading

• Here are 2 FTSE shares I’m excited about this July — and 1 I’m avoiding
• Can anything save the Ocado share price?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Personally, I think you can simplify the process of getting rich into three very basic steps. Ultimately, owning a fortune is far simpler than most people make it out to be.

Step 1

Without a doubt, the first step if you want to be wealthy is to spend less than you earn.

It’s not rocket science to realise that if you spend more than you earn, as many people do, you’re going to go backwards financially. If you want to increase your wealth, you need to start by saving money.

Now I realise that life’s expensive. Often, large expenses get in the way of saving. There are plenty of ways to make saving easier though.

For example, paying yourself first (where you save a proportion of your salary before taking care of your other bills) is a very effective saving strategy as it forces you to prioritise saving over spending. Round-up savings apps (which most banks now offer) can also be effective.

The key is to find a savings technique that works for you and stick at it. Even if you only save a little bit every month, you’ll be heading in the right direction.

Step 2

The next step is to grow that money by investing it. If you leave your savings sitting in a ‘high interest’ savings account, or a Cash ISA, earning 1% or so, it’s not going to grow much at all. In fact, once you factor in inflation, you’ll actually be getting poorer in real-life spending terms over time.

The key, if you want to get rich, is to invest your money in assets that produce high returns over time, such as stocks and funds. By investing in these kinds of growth assets, you can take advantage of one of the most powerful forces in the universe – compounding.

Over the long run, the stock market tends to generate investment returns of around 7-10% per year. What this means is, over time, stocks can transform even just a little bit of money into a huge sum, due to the amazing power of compounding. 

For example, if you were to invest £500 per month into stocks and earn a 9% return on your money over the long run, you’re looking at wealth of around £1m in around 33 years. Invest £10k a year and earn 9% on your money, you’ll hit £1m after just 27 years.

Step 3

Finally, if getting rich is your goal, it’s crucial to act sooner rather than later. By this, I mean you need to act immediately.

As my calculations above show, getting rich takes time. It’s not going to happen overnight. The sooner you get started, the more chance you have of achieving your financial goals.

The post Getting rich isn’t hard. Here are the 3 things you need to do appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Edward Sheldon owns shares in Alphabet (Google). Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares). 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.