2 dirt-cheap shares I’ve bought to hold for 30 years!

I am always looking for cheap stocks to buy for my portfolio. But are stocks ‘cheap’?

I’m not talking about stocks that are just cheaper than a year ago, I’m talking about companies that are undervalued.

But to find undervalued stocks I really need to do some research. So let’s take a closer look at two stocks I recently bought and plan to hold for 30 years.

Dividend giants in insurance

I recently bought shares in it Direct Line Group (LSE: DLG). The insurance company faced challenges in the form of claims inflation early last year and management announced a 31.8% drop in first-half pre-tax profit.

But after the recent rally, at least I can benefit from, the stock remains down 19% year-on-year.

In the near term, the company said that through the measures taken in the garage network, as well as increasing prices, they are back to writing in the target margin “based on most recent claim assumptions“. Also, with interest rates rising, Direct Line should be able to earn more by investing cash premiums.

However, this does not explain why I intend to hold this stock for the long term.

First of all, I don’t see the demand for insurance increasing over time. Insurance institutions have been around for centuries and, despite competition from fintech, I expect it to stay that way.

Wisely, the discounted cash flow model shows that the stock is undervalued by 33%, despite the recent rally.

But I also hold it because of the dividend yield. The stock is currently yielding 10%, but I bought it when it was yielding 12%.

The dividend coverage is only 1.1, but the cash generating capacity is really impressive, so I also want to buy more.

consumer health

Haleon (LSE:HSN) was born when it demerged from GSK and immediately entered FTSE 100.

It is a consumer health giant serving more than 100 markets worldwide and has a presence across multiple channels. The company also has extensive partnerships with retailers and pharmaceutical chains in the US.

So, why Haleon?

It is often discussed that the population is aging, especially in developed economies, and this will increase the demand for health services, medicines, treatments, vaccines and more.

To me, it seems logical to invest in companies in advanced consumer healthcare. I expect demand for their products to grow over the coming decades.

Haleon has such brands Sensodyne, Adviland Voltaren, all are household brands. And this gives them pricing power and the capacity to pass on costs to consumers. In many respects it is a defensive purchase, but I also see the value of this brand as an important part of the firm’s growth.

Since buying Haleon, the stock price is up 13%, but I would still buy more. I support this UK stock for the long term.