Investors don’t need to fork out eye-watering sums every month to build a winning shares portfolio. History shows us that the average long-term investor makes an annual return of 8%-10%. Those who take the time to build a sound investment strategy filled with the best UK stocks can make even more.
Let me take that 8% figure to show how regular investment can end up making share pickers a big pot of cash. If I were to invest £500 in a Stocks and Shares ISA every month I could potentially expect to make at least £563,420 after 30 years.
This offers much more potential for me to make glorious returns than a traditional low-yielding savings product like a Cash ISA. Even the best-paying instant-access account doesn’t offer a better interest rate than 0.6% today. I also prefer to buy UK shares than cryptocurrencies like Bitcoin as regulators clamp down on them. I worry about the prices of these new-age currencies going all the way down to zero.
Not that share returns are guaranteed, of course. Stock prices can fall and dividends can be cut, while a historical figure can’t be used to predict the future. But overall, I still see the stock market as a better home for my cash.
A cheap UK stock on my radar
Why take a chance with high-risk assets like cryptocurrencies anyway? As I say, stock markets have a long history of making individuals huge wads of cash. Buying following selloffs can help one supercharge the returns they can make over the long term too.
I believe NCC Group (LSE: NCC) could be one of the best stocks to buy to fight the growing problem of cybercrime. I also think it might be one of the best value shares to buy, following its recent share price fall. City analysts think earnings here will shoot 26% higher this fiscal year (to May 2022). At current prices, this leaves the company trading on a forward price-to-earnings growth (PEG) ratio of just 0.8.
A reminder that a reading below 1 suggests a UK stock could be undervalued. My belief that NCC could now be too cheap for me to miss having been reinforced by the excellent trading release of mid-September. Then the cybersecurity giant said that sales jumped 2.6% in the 12 months to May, a result which pushed pre-tax profit 54.2% higher year-on-year.
Stunning profits growth on the horizon?
As NCC noted in that release: “Cyber resilience is no longer optional for any organisation and has become a board-level issue.” The cybersecurity market was already growing at 8%-9% a year before the outbreak of Covid-19, the company says. I fully expect the sector to grow even faster in the coming years too, given the growth of e-commerce and non-office-based working in the wake of the pandemic.
Okay, NCC operates in a highly-competitive market and it will have to paddle extremely hard to compete with industry giants like Microsoft, Mcafee and FTSE 100-quoted Avast. But I think this threat is more than reflected in the company’s rock-bottom valuation. I think NCC could be one of the best UK tech stocks to buy right now, and particularly at recent prices.