- There are risks involved while investing in stocks, but it is better than keeping idle cash, as cash loses its value with the passage of time
- Diversification strategy could help in elevating risks while investing in the stocks
- Cash poor investors with low-risk appetite and with even less than 2 pounds in the pocket can consider investing in stocks
As the coronavirus pandemic washed up the shores of UK in March, the British government-imposed lockdown to contain the spread of the deadly virus. Since the lockdown, London’s broader equity benchmark index has recovered by nearly 20 per cent. Similar recovery patterns were evident across other major indices of the world. These recovery patterns are drawing many investors to the stock markets. However, interest yields prevalent in the market are quite low as Bank of England (BoE) reduced them to all-time low to protect the flow of credit in the economy. Therefore, the access of money flow in the market could depreciate pound faster. The British government does not seem to restrict the flow of credit in the economy by increasing the interest rates in the near term. This type of scenario often prompts the investor to choose between equity investments and cash.
The biggest issue with cash is that it loses its value with the passage of time due to inflation and other economic factors. Due to the unprecedented crisis, the British government has rolled out several stimulus packages, and the British economy was flooded with credit. This would certainly devalue cash. As cash circulation in the economy increases, money tends to lose value.
In addition, parking cash with banks is not fetching enough returns for investors given the prevalent conditions in the economy. On the flip side, using cash to buy stocks can yield terrific returns in the times to come.
Cash as an asset
If you think about cash as just another asset class which could be traded for another asset, the same is true for stocks. Stocks could be traded for cash or gold. Cash as a part of the asset mix can be looked upon for price movements just like an exchange. For instance, when the stock market goes up, it means that the market is up with respect to cash.
It all starts with investing. However, investing in stocks could be risky as the markets are volatile. Big resilient businesses with solid fundamentals could be looked upon to include them in an avid investor’s watchlist. The markets have already undergone steep correction in recent times. Cash poor investors with very low-risk appetite can begin investing with just 2 pounds in pocket. However, it is imperative for investors to do their own research or consult a financial adviser before investing. Beginners with less money in the pocket can begin investing in stocks from as low as two pence.
In this article, we would be discussing a few stocks which have generated handsome returns in recent times despite the unprecedented crisis caused by the pandemic. The stocks under discussion are hovering under GBP 2. (All data figures are taken from Refinitiv, Thomson Reuters).
- Avacta Group Plc: YTD Total Return- 740.60%
Avacta Group Plc (LON: AVCT) is an FTSE AIM All-Share listed Company, which is engaged in the development of immunotherapies for novel cancer through its platforms, namely Affimer® and CISION™. Its therapeutics development activities are based in the United Kingdom.
The Group’s revenue for the UK region was recorded as £1.69 million for 17 months ending on 31 December 2019 (31 July 2018: £1.11 million). Avacta Group Plc shares were trading at GBX 136.50 at the time of writing (at 1:30 PM GMT+1) on 3 August 2020, down by 9.00 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 202.00, and 52-weeks Low is GBX 14.00. On a YTD basis, shares of Avacta Group delivered a staggering price return of more than 740 per cent.
- Greatland Gold Plc: YTD Total Return- 638.90%
Greatland Gold Plc (LON: GGP) is a precious metals mining and development company with deep assets in Western Australia and Tasmania, having its headquarters in London.
The company recorded cash and cash equivalents more than £4 million as on 31 December 2019. Greatland Gold Plc shares were trading at GBX 14.20 at the time of writing (at 2:33 PM GMT+1) on 3 August 2020, up by 5.19 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 15.20, and 52-weeks Low is GBX 1.57. On a YTD basis, shares of Greatland Gold Plc delivered a staggering price return of more than 630 per cent.
- Omega Diagnostics Group Plc: YTD Total Return- 325.40%
Omega Diagnostics Group Plc (LON: ODX) is a medical diagnostic company which deals in segments such as Allergy and Autoimmune, Food Intolerance, Infectious and Corporate.
The Group’s revenue increased by 1 per cent to £9.82 million (2019: £9.76 million) for the year ending on 31 March 2020. Omega Diagnostic Group Plc shares were trading at GBX 54.50 at the time of writing (at 3:00 PM GMT+1) on 3 August 2020, down by 6.84 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 73.50, and 52-weeks Low is GBX 6.75. On a YTD basis, shares of Omega Diagnostics Group delivered a staggering price return of more than 320 per cent.
Investing in stocks as an asset class provides the investor with the benefit of diversification, which is not possible in case of keeping the cash. Diversification is important when it comes to balancing the risk of the portfolio in terms of asset classes.
With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities.
Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?
Well! Team Kalkine has a solution for you. You still can earn a relatively stable income by putting money in the dividend-paying stocks.
We think it is the perfect time when you should start accumulating selective dividend stocks to beat the low-interest rates, while we provide a tailored offering in view of valuable stock opportunities and any dividend cut backs to be considered amid scenarios including a prolonged market meltdown.