Stock market crash: 3 cheap UK shares I’d buy in October

Rupert Hargreaves takes a look at three cheap UK shares that could be worth buying, based on fundamentals, following the stock market crash.

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After this year’s stock market crash, there’s a whole range of cheap UK shares that may appeal to value-seeking investors. 

Today I’m going to take a look at three businesses that could be worth buying in October. 

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Cheap UK shares

Insurance giant Aviva (LSE: AV) is one of the best cheap UK shares to buy right now, in my opinion. The company, which is one of the largest financial services groups in the UK, is in the middle of a multi-year transition. 

It is selling off its overseas business and focusing on the UK operation. This may lead to improved shareholder returns in the medium term.

Aviva has long been criticised for spending too much money on its international businesses where it has no edge, while under-investing in the UK. It looks as if the current management is planning to reverse this, and that could lead to faster growth at the domestic business. 

Managing pensions and long-term savings is a defensive business, so the company has been relatively unaffected by the coronavirus crisis. Despite this, the stock is trading at one of its lowest levels in the past decade.

I think this could be an excellent opportunity to snap up shares in the business after the stock market crash. A prospective dividend yield of 9% is also an offer for income investors. 

Legal & General (LSE: LGEN) is suffering from the same investor sentiment.

Despite the defensive nature of the business, shares in the company have fallen to levels not seen for over five years. Once again, I think this could be an excellent opportunity for long-term investors. 

LGEN is a financial services giant. It is one of the largest pension managers in Europe, which gives it a competitive edge over peers. Customers want to be sure that they can rely on the business to look after their money in the long term. 

This size and defensive nature have helped the company maintain its dividend commitments to investors. The stock is projected to yield 10% and is currently trading at a forward price-to-earnings (P/E) multiple of less than 7. These metrics make the stock stand out as one of the best cheap UK shares to buy right now, in my opinion. 

Stock market crash bargain

Investors on the lookout for market crash bargains may also be interested in broker TP ICAP (LSE: TCAP). This business facilitates trades between financial institutions in the City. Most of the time, this is a slow and steady business. However, when market volatility explodes, so do trading volumes. 

That’s precisely what happened in this year’s stock market crash, and TP was a significant beneficiary. City analysts are expecting the group’s earnings per share to rise by a double-digit percentage overall for the year as a result.

Still, despite this perspective growth, the stock is trading at a forward P/E ratio of just 7.7. That’s around half the market average. It also supports a dividend yield of 6.2%. With a net cash balance of £674m, it would appear the group has plenty of financial firepower to maintain this distribution. 

As such, I think it could be worth considering TP as part of a basket of cheap UK shares. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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