I must admit, the concept is brilliant and almost irresistible. By simply purchasing a single ticket for £2.50, you are in with a shot of winning an extremely large chunk of money.
But this is not without faults. The chances of winning the jackpot are extremely slim, with the odds being one in 138,838,160. To put this remoteness into perspective, the BMJ puts the odds of being struck by lightning at one in 10,000,000.
With a Euromillions draw twice a week, spending £2.50 on each line can soon add up. If you purchase two lines for each draw, you would have spent £40 a month with almost no chance of a return.
Instead, I would rather get rich by buying shares in quality UK companies.
By investing through a Stocks and Shares ISA, you will not pay tax on any gains (rising share prices or dividends), up to an investment threshold currently set at £20,000 a year.
By purchasing stocks, you have a shot of getting rich from dividend payments and growth in the value of the share price. If you use your dividend earnings to acquire more shares, you could potentially supercharge the size of your portfolio. This is known as compounding and over the long term, it is an incredibly powerful force.
What do I look for when I am assessing shares?
I want to find companies with a good management structure, a competitive advantage against its rivals, and a strong track record. Over time, I fancy the chances of these types of companies growing.
I think I have found two businesses here that both tick all of the boxes.
In a bear market, I favour consumables companies with a strong portfolio of brands. I believe that low-cost quality branded items will always find a way into customers’ baskets.
I feel this is the case with Reckitt Benckiser’s brands, which include Calgon, Durex, Nurofen, Dettol and Veet.
The Reckitt Benckiser share price has taken a bit of a hammering over the past three years, dropping by 16%. Despite this, profit-before-tax has remained fairly constant and its revenues have actually grown. I feel that the market is currently undervaluing this one.
Currently, its share price has a price-to-earnings ratio of 17 and a prospective dividend yield of 2.75%, meaning now could be a great buying opportunity.
Like Reckitt Benckiser, Unilever (LSE: ULVR) is another consumables company that has a strong portfolio, owning brands such as Dove, Ben & Jerry’s, Marmite and Vaseline.
I believe it is a quality company, and traditionally, Unilever’s share price has always reflected this. However, in this bear market, I am hopeful that now could present the ideal buying opportunity for value investors.
In the past six months, the stock price has dropped by 14%. However, its price-to-earnings ratio, at 20, is still on the rich side.
Now that Unilever has a prospective dividend yield of 3.25%, this could be an ideal share for investors looking for a second income stream.
With the market appearing to be on a downward spiral, I will be waiting for Unilever’s stock price to drop more before buying!
The post Forget Euromillions! I think these FTSE 100 stocks are a better bet appeared first on The Motley Fool UK.
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T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.
Motley Fool UK 2020