2 super-cheap UK shares I’d buy today

This Fool thinks these super-cheap UK shares could be some of the best stocks to buy right now. He already owns one of them.

| 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 super-cheap UK shares is a strategy some investors follow because evidence shows this approach can achieve market-beating returns.

Of course, returns are never guaranteed with any investment approach. Still, I believe that buying stocks at low valuations is an approach that has helped my portfolio over the past decade.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

And with that in mind, here are two super-cheap UK shares I’d add to my portfolio today. 

Super-cheap UK shares

When looking for cheap shares, investors often overlook growth companies. I think this is a big mistake. Stocks that look cheap compared to their prospective growth can be just as good investments as those that look cheap on other metrics. 

That’s why I’d buy Vitec (LSE: VTC) for my portfolio. At first glance, this stock doesn’t look cheap. It’s trading at a price-to-earnings (P/E)  ratio of 21.8. However, with earnings per share expected to rise substantially in 2021 and 2022, the stock is trading at a 2022 P/E of just 17. 

Vitec provides hardware products and software solutions to the rapidly expanding content creation market. The global digital market is expected to grow at a compound annual rate of 9.1% by 2025.

If Vitec’s growth continues at this rate, the stock could currently be selling at a low-teens multiple of 2025 earnings. That looks cheap to me compared to the valuations of stocks in the same sector around the world. These stocks are trading at multiples around 25 times forward earnings. 

This potential is why I believe this is one of the best cheap UK shares to buy now. That said, the company isn’t guaranteed to hit these growth targets. If growth stumbles, investors may decide to avoid the stock and push its valuation lower. That’s the most significant risk of investing in Vitec today. 

Still, I’d buy the stock today based on its growth potential

Deep value 

The other company I’d buy for my portfolio of cheap UK shares is Town Centre Securities (LSE: TOWN). In fact, I already own shares in the business. 

I should start by saying this isn’t an investment for the faint-hearted. The real estate investment trust owns a portfolio of commercial property assets in Leeds and Manchester. Unfortunately, these have seen their valuations and income decline over the past 14 months.

It’s also a relatively small business with a market capitalisation of just £72m, at the time of writing. 

Aside from these risks, the stock is selling at a price to book ratio of 0.5. I think that looks incredibly attractive. Moreover, its largest shareholders are also the founding family, which means they’re incentivised to achieve a good outcome for all investors. 

Based on these reasons, I’d buy more of the stock for my portfolio of cheap UK shares, despite the risks outlined above. Of course, the company may encounter further turbulence as the economy recovers from the pandemic, but I’m encouraged by its low valuation and management ownership. 

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Rupert Hargreaves owns shares of Town Centre Securities. The Motley Fool UK has recommended Vitec Group. 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.

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 considered, so you should consider taking independent financial advice.

More on Investing Articles

Female florist with Down's syndrome working in small business
Investing Articles

2 promising penny stocks to buy on the dip

As stock markets continue to correct, I am hunting for oversold penny stocks that I think could help turbocharge my…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

I wouldn’t buy Bitcoin today. FTSE value stocks look much better value to me

Now looks like a promising time to buy UK value stocks, while Bitcoin still looks far too risky for me.

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price is below 85p. Here’s what I’m doing!

The Rolls-Royce share price has suffered this year. Trading for below 85p, this Fool decides whether this is an opportunity…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

4 dividend stocks to buy as inflation soars!

I'm hunting for the best dividend stock to invest in as global inflation soars. Here are several high-dividend-yield shares that…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

UK shares to buy now: 3 big fallers I’d snap up

Our writer thinks this trio of strong business performers could be attractive UK shares to buy now for his portfolio.

Read more »

Lady researching stocks
Investing Articles

Could a falling stock market help me get rich?

When the stock market falls, what does it mean for our writer's portfolio? Here's why it could be an opportunity.

Read more »

Hand holding pound notes
Investing Articles

Should I buy these two 12%-yielding dividend shares for my Stocks and Shares ISA?

Do these double-digit dividend yielders offer our author the right balance of risk and reward for his Stocks and Shares…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 reasons to buy Lloyds shares at 43p

Our writer outlines three factors that make him bullish on Lloyds shares, as well as one noteworthy risk facing the…

Read more »