Here’s one of my favourite cheap UK shares to buy in 2021 for the new bull market

Royston Wild is looking for cheap UK shares to buy in a Stocks and Shares ISA. Here’s one stock he reckons will soar during the economic upturn.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The 2021 outlook for the global economy remains highly uncertain today. But it hasn’t stopped me from buying UK shares in my Stocks and Shares ISA.

This is partly because I buy shares with a view to how they’ll perform over the long term, not simply on a 12-month time horizon. It’s also because there are plenty of stocks out there that should thrive irrespective of broader economic conditions.

Trifast (LSE: TRI) is one dirt-cheap UK share whose profits City analysts expect to bounce strongly in the next few years. The business manufactures screws, bolts and other types of industrial fastenings for a variety of cyclical applications. This will allow it to ride the upswing in consumer spending that accompanies the early stage of the new economic cycle.

Car production set to boom

I’m particularly excited by Trifast’s critical role in the global automobile industry. This isn’t just because car demand is one of the quickest to recover during economic upturns. It’s because this UK stock is a major supplier to Tier 1 car manufacturers the world over. Consequently, its market share continues to grow and grow. It stands to win big as auto production rates are set to soar over the next decade.

The experts at Statista, for instance, reckon that 110m vehicles will be produced each year by 2025. This compares with the 93m cars the European Automobile Manufacturers’ Association says were created in 2019. And Statista also reckons 117m new motors will roll off the production lines each year by 2030.

A UK share that’s too cheap to miss?

The soaring popularity of electric cars is one reason why car production rates are set to steadily rise. And this bodes particularly well for Trifast. The batteries in these cars require high levels of fastenings. The charging points needed to keep them running, both at home and on the road, also require elevated loadings.

All this explains why City analysts expect this UK stock’s earnings to balloon during the next few years. They expect Trifast to move back into earnings in this financial year (to March 2021). Then annual profit rises of 26% and 12% are predicted for financial 2022 and 2023 respectively.

A price-to-earnings growth (PEG) reading below 1 is broadly considered excellent value. And Trifast, at current prices, boasts a reading of 0.8 for fiscal 2022, making it to good to miss, in my opinion. But this isn’t the only reason I think it’s an exciting buy following the 2020 stock market crash. I think its share price could go gangbusters during the new bull market.

Trifast’s share price collapsed in the wake of the 2007-08 financial crisis. But after slumping to below 9p in March 2009 it rocketed to around 190p in the following 10 years. This marked a staggering 2,000-plus-percentage rise in that period.

And the factors I describe above make me think that it’ll explode again in the next decade too.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild 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.

More on Investing Articles

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

Should I buy these UK shares for my portfolio?

This Fool has been searching for ways to capitalise on the commodity moves via UK shares. Here’s what he’s watching.

Read more »

Illustration of flames over a black background
Investing Articles

Just released: April’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »

A senior group of friends enjoying rowing on the River Derwent
Investing Articles

£9,000 in savings? Here’s a FTSE 100 stock I’d buy to target a £30,652 annual second income!

Our writer highlights one top FTSE 100 share that he thinks could help create a portfolio large enough for a…

Read more »

Light bulb with growing tree.
Investing Articles

62% down! Is the Ceres Power share price now a green energy bargain?

Annual results from the green energy firm showed a company on the cusp of doubling sales. So why has the…

Read more »

Investing Articles

3 mid-cap UK defence shares to consider buying in 2024

Defence budgets are soaring as global conflicts increase the threat landscape, so I'm examining the value proposition of three defence-related…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Hargreaves Lansdown investors have been buying dividend stocks BP and Shell. Should I?

Cherished dividend stocks BP and Shell have outperformed the FTSE 100 index so far in 2024. Paul Summers takes a…

Read more »

Young Asian man shopping in a supermarket
Dividend Shares

A 5% yield? Here’s the 3-year dividend forecast for Tesco shares

Jon Smith flags up the positive momentum for Tesco shares following the release of the full-year results and looks at…

Read more »

Investing Articles

Yields up to 12.3% 3 top shares investors should consider for a second income

Searching for ways to make a market-beating second income? These popular dividend stocks are worth serious consideration, says Royston Wild.

Read more »