Stock market investing can be a wonderful way to build long-term wealth. It’s why I invest any spare cash I have at the end of the month in my shares portfolio.
Even a reasonably modest sum like £5,000 invested today can have a significant impact upon my long-term wealth. If UK shares continue to provide an average annual return of 10% — as they have during the past decade — I would, after 30 years, have made an impressive £87,250.
Heavy stock market volatility in 2022 has left a vast number of top shares trading at dirt-cheap prices. Here are several I think could surge from current levels and deliver stunning long-term returns. Each trades on a rock-bottom earnings multiple and carries attractive dividend yields.
Macfarlane Group
The trouble with investing in shares around the ‘penny stock’ territory is that they are vulnerable to extreme share price volatility. But I think Macfarlane Group will deliver terrific shareholder returns as e-commerce grows.
You see Macfarlane (which trades at 105p per share) manufactures and distributes generic and custom-fit packaging. And earlier this year it sold off its labels division so it can dedicate investment to this fast-growing sector. Revenues at the business jumped 14% in the six months to June.
Today this small cap trades on a price-to-earnings (P/E) ratio of just 9.2 times for 2022. It also boasts a healthy 3.2% dividend yield.
Vistry Group
The London stock market is awash with housebuilders that trade on low earnings multiples and carry vast dividend yields. Take Vistry Group for example. This particular operator trades on a forward P/E ratio of 4.8 times and sports a 9.7% yield.
Companies like this are particularly vulnerable to rising interest rates. In this scenario, buyer affordability comes under increasing pressure, which can damage sales.
But so far Vistry and its peers has proved resilient to recent Bank of England action. This particular builder reported a 10% rise in forward sales as of early September.
Things could get even better for the house builders if current rumours around stamp duty prove correct, too. Media gossip says that the government will cut the property tax in Friday’s mini budget.
St James’ Place
As my Foolish colleague Edward Sheldon recently commented: “High inflation, rising interest rates, stock market volatility, and falling bond prices all present challenges for those looking to save and invest for their future”.
Accordingly, people are scrambling around for help on how to best use their money. For this reason I’d buy FTSE 100 stock St James’ Place for my portfolio. I like its bulky 4.9% dividend yield, and its forward price-to-earnings growth (PEG) of just 0.4 makes it a steal.
Competition in the financial services space is intense. But as one of the industry’s leading players, St James’ Place has the strength and brand recognition to thrive in this tough market. I think it could deliver terrific long-term investor profits.