3 cheap UK stocks I’d consider buying in September

Economic tailwinds should help these three cheap UK stocks produce large total returns for investors in the years ahead says this Fool.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Union Jack flag hanging from a building

Image source: Getty Images

Buying cheap shares after a market crash is a tried and tested way of building wealth. With that in mind, today I’m going to take a look at three cheap UK stocks I’d considering buying in September before other investors catch on to the opportunity. I also like ITV at the moment, but my trio for today are all a world away from the television giant.

Three cheap UK stocks

Howden Joinery Group (LSE: HWDN) is one of the most successful UK corporations. Its success lies in rewarding individual store managers, who get to keep a portion of their profits. This means that while the company might face some decline in revenue in the near term, employees are highly incentivised to drive growth over the long run.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

That’s why I think this could be one of the best cheap UK shares to buy. Howden has a strong brand, a loyal customer base and incentivised employees. These factors could help the company ride the UK’s economic recovery over the next few years.

City analysts are expecting earnings per share to fall by around 50% this year before rebounding in 2021.

Despite this, and the company’s obvious competitive advantages, the stock continues to trade around 15% below the level at which it began the year. As such, it could be worth buying Howden as part of a basket of cheap UK stocks while it offers a margin of safety.


As cheap UK stocks go, I think Renishaw (LSE: RSW) stands out. 

This highly specialised and unique business provides industrial automation and motion systems for the engineering and healthcare sectors.

It’s a world leader in automated manufacturing systems, which gives the company a strong competitive advantage around the world.

Demand for Renishaw technology has exploded this year. Analysts are forecasting earnings growth of nearly 200%. Companies have rushed to automate their systems as coronavirus has impacted workforces around the world. I think this could give Renishaw years of revenue growth.

Therefore, despite the company’s premium valuation, from a long-term perspective, I think the business qualifies as one of the best cheap UK stocks.

It is currently dealing at a forward price-to-earnings (P/E) ratio of nearly 40, but there are only a handful of other companies that operate in the sector.

I think it is worth paying a premium for this business.


Bellway (LSE: BWY) is set to benefit from the UK’s structurally undersupplied housing market in the years ahead. Despite this potential, investor sentiment towards the homebuilder is weak.

The stock is currently dealing at a forward P/E of 9.

I think this valuation deeply undervalues the company. For example, the rest of the housebuilding sector is trading at a P/E of 12. As such, I think the stock offers a wide margin of safety at current levels and qualifies as one of the best cheap UK stocks to buy now.

Bellway has also returned a healthy amount of cash to investors in the past through dividends. To conserve some money, the company has reduced its dividend this year, but I expect management to increase the payout next year when business returns to normal.

If the dividend is resumed at 2018 levels, investors can look forward to a 6.3% dividend yield on the current stock price.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Howden Joinery Group and Renishaw. 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.

More on Investing Articles

University graduate student diploma piggy bank
Investing Articles

Should I be concerned about the windfall tax for my BP shares?

What does the new UK windfall tax mean for the BP share price? Michelle Freeman digs into the details to…

Read more »

Buffett at the BRK AGM
Investing Articles

What Warren Buffett’s wisdom and investing in stocks will teach you about life

Investing is a journey of self-discovery. So what will stocks and the words of legendary investor Warren Buffett teach you…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

5 ‘no-brainer’ income stocks to buy today!

Amid soaring inflation, I'm looking at these income stocks, offering big yields, to grow my portfolio.

Read more »

Trader on video call from his home office
Investing Articles

How I’d buy the dip in quality UK stocks with £750

Jon Smith explains the concept of buying the dip, and talks through the UK stocks he's going to buy at…

Read more »

Woman looking at a jar of pennies
Investing Articles

5 UK penny shares to buy with £5,000 today

It's hard to remember a time when there were as many tempting penny shares around as now. Here are five…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

The Scottish Mortgage share price keeps falling. Should I buy?

The Scottish Mortgage share price has collapsed from its all-time high in little more than six months. Is it now…

Read more »

UK money in a Jar on a background
Investing Articles

Value investing isn’t dead! My top stocks to buy as inflation hits 9%

As value investing principles come back into fashion, Andrew Mackie looks at the current backdrop and shares what he's investing…

Read more »

Windmills for electric power production.
Investing Articles

Which FTSE 100 shares would I buy to offset higher fuel bills?

Rishi Sunak unveiled a windfall tax this week, hitting shares of energy firms, and especially oil & gas producers. But…

Read more »