3 of the best cheap UK shares to buy in an ISA
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UK share markets are packed with brilliant bargains right now. Here are three cheap stocks I’m thinking of adding to my Stocks and Shares ISA today.
#1: A top UK drinks share
Stock Spirits Group’s (LSE: STCK) a UK share that seems to offer explosive growth at low cost. City analysts reckon earnings here will surge 114% in this fiscal year (to September 2021). This leaves it trading on a low forward price-to-earnings growth (PEG) ratio of 0.2. Any reading around of below 1 can suggest that a stock has been undervalued by the market.
Bear in mind there’s no guarantee that these heady profits estimates will prove accurate, of course. And Stock Spirits might experience severe profits pressure if the pound continues to rise (the drinks giant generates the lion’s share of its profits from abroad, putting it at the mercy of significant currency headwinds). I’d still buy the company, though, as I think rising wealth levels in its Central and Eastern European emerging markets could light a fire under profits growth over the long term. The Czech spirits market, for instance, grew 12% in value in the final quarter of 2020, according to Nielsen, as consumption of premium drinks continued to rise.
#2: Riding the gold train
Trans-Siberian Gold (LSE: TSG) also changes hands on mega-low earnings multiples today. City forecasters reckon earnings at the UK mining share will rise 15% in 2021. As a consequence, the company trades on a forward PEG ratio of 0.4 times.
The number crunchers think profits will rise again this year thanks to the bright outlook for gold prices. Ongoing inflationary concerns as well as fears over the economic recovery are tipped to keep demand for safe-haven gold bubbling nicely. It’s also because Trans-Siberian Gold continues to print new production records each and every year (the company heaved 45,066 ounces of the yellow metal out the Russian ground in 2020, a new all-time high). Remember that past production is no indication of future success, however. And a word of warning: the mining business is fraught with dangers that can bring excavating activity to a shuddering halt.
#3: The till titan
PayPoint (LSE: PAY) could offer some serious bang for my buck as well today. The retail terminal maker is forecast to record a 34% earnings drop in the outgoing financial year (to March 2021). But this UK share is expected to bounce back with a 16% bottom-line rise in financial 2022. This means it carries a forward PEG ratio of just 0.9 times. The company also sports a 6% dividend yield for the next financial period.
I believe the future is bright as adoption of the firm’s cutting-edge PayPoint One terminals ticks along at a brisk pace. More than 900 of these were installed in the nine months to December to take the total to 27,758. I think the rise of digital payments, and increasing parcel volumes due to the e-commerce boom, provides more for the UK share to be excited about too. Beware though, as PayPoint suffered significantly from Covid-19 lockdowns as bill payments made via its retail terminals toppled. A long road out of current restrictions could harm revenues this year too.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended PayPoint. 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.