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September sell-off: 2 of the best cheap stocks to buy

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September’s proved to be a washout for many UK share prices. The FTSE 100 has fallen 1% in the month to date as concerns over a Chinese property market crash and rising inflation have grown. British stocks could struggle for momentum as 2021 draws to a close, too, should worries over rising Covid-19 rates, the Chinese economy, and earlier-than-expected central bank tightening worsen.

That doesn’t mean I’ll stop shopping for UK shares, however. As someone who invests for the long term, the possibility of temporary share price weakness doesn’t put me off. I think there are too many magnificently cheap stocks out there to miss following the September sell-off.

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Here are what I consider to be two of the best cheap stocks to buy for my portfolio right now.

A cheap UK stock for the pets boom

Pet ownership in the UK has gone through the roof due to Covid-19 lockdowns. This means that the amount people are spending on animal care products is also soaring. Blockbuster trading numbers from veterinary surgery CVS Group this week illustrated this perfectly. It’s a phenomenon that should continue powering earnings at Pets at Home Group (LSE: PETS) higher too. Revenues here exploded 30.2% year-on-year in the 16 weeks to 15 July, latest financials showed.

City analysts think earnings here will rise 49% and 10% in the two fiscal years to March 2022 and 2023 respectively. Yet I don’t think this cheap stock’s excellent profits prospects are reflected at current prices. Today Pets at Home trades on a forward price-to-earnings (P/E) ratio of 0.5. A reminder that a reading below 1 suggests that a stock could be undervalued.

Now it’s true that Pets at Home faces significant competition. The food, litter, toys, and broad range of other products it sells can also be picked up from major supermarkets like Tesco as well as US online behemoth Amazon. That being said, I think sunny long-term forecasts for pet care spending still makes this a top stock for me to buy right now. Researchers at Global Market Insights reckon the global pet care market will be worth $350.2bn in 2027 versus an estimated $232.3bn this year.

Logistics leviathan

I also think Clipper Logistics could be a brilliant cheap stock for me to buy as e-commerce levels explode. Retailers across the UK (including Pets at Home) have spent a fortune to bolster their online operations since Covid-19 lockdowns came into effect. And heavy spending here should continue as consumer trends steadily evolve.

Latest Office of National Statistics figures showed that the proportion of retail sales generated online continues to grow. This came in at 27.7% in August versus 19.6% in February 2020 before the pandemic.This bodes well for Clipper Logistics, a cheap stock that provides a variety of e-fulfilment, returns, and logistics services.

Profits at Clipper Logistics could suffer if a slowing UK economy hits consumer spending. But at the moment things look pretty good. City analysts think the support share will see earnings grow 30% and 9% in the next two financial years (to April 2022 and 2023, respectively). This leaves the company trading on an undemanding forward PEG ratio of 1.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild owns shares of CVS Group and Clipper Logistics. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Clipper Logistics and Tesco and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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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