A couple of ideas are uppermost in my mind while searching for shares to buy right now. The first is that new leading stocks often head the charge into the next bull market after a bear phase.
And the second is that the first shares to take off often begin their ascent before the broader market. And that can mean some of the most promising names start rising even as the main indices such as the FTSE 100 and FTSE 250 continue to look weak.
Falling commodity prices
I’ve also noticed that commodities such as oil, gas, copper, lumber and others have been falling in price over the past few days and weeks. And I take that as a good sign. It could be indicating that price inflation will become less of a problem soon. There’s nothing scientific about trying to read macroeconomic and geopolitical trends. But my feeling is the markets may be close to their bottom.
Russia’s withdrawal from Snake Island prompted me to actually pull the trigger and begin buying some of the shares I’d been watching. And yesterday, my optimism was buoyed even further when I saw this headline: Bank of England issues dire forecast for UK: expect more pain and misery.
That one really has got a nice catchy ring to it! But as far as the stock market is concerned, I think it’s ancient history. The market tends to look ahead of events on the ground by as much as three, six or even nine months. And economic data is behind because it looks at months that have already been and gone.
Meanwhile, stock markets tend to move up when the news is at its worst and bearish opinion is at its most intense. And that headline suggests that even the Bank of England is now bearish!
What I’ve been buying
So, rightly or wrongly, I started buying. And generally, the businesses in my crosshairs had some recent positive news flow. On top of that, they needed to have tempting valuations, decent quality indicators and a clear runway to multi-year growth.
Now I’m the proud owner of shares in fast-moving consumer goods company Unilever. In a recent update, the directors said the business had been coping well with rising input costs. And had been able to raise its selling prices to preserve profit margins.
The valuation was lower than I’d seen it for years. City analysts predict a single-digit percentage rebound in earnings for 2023. And with the share price near 3,856p, the forward-looking dividend yield for that year is around 4%.
There are never any guarantees with the stock market. And I could be wrong about Unilever’s potential. It’s even possible for me to lose money on my investment. Nevertheless, I’m prepared to shoulder the risks in the pursuit of positive returns over time.
My other recent purchases include timber distributor James Latham and software company Cerillion. But, as with all my investments, I’m prepared to hold for at least five years and probably much longer to see what happens.
