2 UK stocks under £3 to buy today

Edward Sheldon highlights two UK stocks that look set to benefit from powerful long-term trends. Both shares currently trade under £3.

| 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.

Close-up of British bank notes

Image source: Getty Images

Low-priced stocks tend to be popular with investors. One reason for this is we got a lot of shares for our money.

Here, I’m going to highlight two UK stocks trading under £3 that I’d be comfortable buying today. Both of these companies look set to benefit from powerful long-term trends, and I think they have a lot of growth potential.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

A top stock under £3

The first stock I want to highlight is Tritax Big Box (LSE: BBOX). It’s a real estate investment trust (REIT) that invests in large logistics warehouses and rents them out to blue-chip retailers, such as Amazon, Tesco, and M&S. Its shares can currently be picked up for around £2.25 a piece.

BBOX strikes me as a great way to play the UK e-commerce boom. Consumers today are increasingly shopping online and they want their goods delivered quickly. To operate efficiently, online retailers need modern, automated warehouse facilities that are strategically located and allow for goods to be distributed seamlessly. Tritax is a leader in this space with a best-in-class portfolio of warehouse assets. As the e-commerce industry continues to grow, BBOX should also continue to benefit.

One risk here is that, as a REIT, BBOX sometimes needs to raise additional money from investors through share placings to expand its portfolio. These can push its share price down in the short term.

However, I’m comfortable with this risk. That’s because these share placings help accelerate the company’s development programme and, ultimately, fuel long-term growth.

It’s worth noting that analysts at Berenberg recently initiated coverage of the stock with a ‘buy’ rating and a £2.50 price target.

Strong growth potential

Another stock under £3 I like the look of right now is Big Technologies (LSE: BIG). It’s a UK company that has developed technology that helps with the remote monitoring of individuals. This tech, which is sold under the Buddi brand, can help those facing cognitive and/or physical decline live independently. The share price here is currently around £2.97.

Big Technologies is growing at a fast pace which isn’t surprising given that the number of over-65s globally is growing quickly. Last year, for example, revenue was up 53% to £29.6m. Meanwhile, in the first half of 2021, the company generated revenue growth of 41%. Looking ahead, analysts expect the group to generate top-line growth of 24% for 2021.

One thing that stands out to me about Big Technologies is that CFO Daren Morris recently purchased stock. Regulatory filings show that on 15 October, the insider picked up 108,755 shares at a price of £2.96 per share.

I see this ‘director dealing’ as bullish. Morris has an investment background (he was previously a managing director at both UBS Investment Bank and Morgan Stanley) so is likely to have a good understanding of the company’s true value.

A risk here is the valuation. Currently, BIG shares trade at 52 times next year’s earnings. That’s quite high and doesn’t leave a huge margin of safety. If future growth is disappointing, the stock could fall.

Overall however, I think the long-term risk/reward profile here is attractive. I’d be comfortable taking a small position in this sub-£3 stock today.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Edward Sheldon owns shares of Amazon and Tritax Big Box REIT. The Motley Fool UK has recommended Amazon, Tesco, and Tritax Big Box REIT. 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

Buffett at the BRK AGM
Investing Articles

I’m listening to Warren Buffett about investing for the future

How does Warren Buffett incorporate an uncertain future into his investment strategy? Christopher Ruane explores what he's learnt from the…

Read more »

Worker on sofa and team on laptop screen talking and discussion in video conference and dog interruption.
Investing Articles

The Alphabet share price has fallen 25%. Time to buy?

The Alphabet share price has fallen sharply in 2022 -- and our writer scents a buying opportunity for his portfolio.

Read more »

Close-up of British bank notes
Investing Articles

How I’d invest a Stocks and Shares ISA to target yearly dividends of £1,350

Our writer reckons he could invest a £20,000 Stocks and Shares ISA to generate substantial dividend income. Here's how he…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

UK shares to buy now: how I’d invest a £1,000 lump sum

Our writer highlights some shares to buy now for his portfolio that he hopes offer both growth and income prospects.

Read more »

Investing Articles

3 top FTSE 100 shares to buy in a recession

Our writer explores three FTSE 100 shares that could protect the value of his stock market portfolio in the event…

Read more »

A Rolls-Royce employee works on an engine
Investing Articles

Could I double my money with Rolls-Royce shares?

Rolls-Royce shares have been on a downward track this year amid ongoing-pandemic related challenges. But is now a good time…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

Down 50%, are Scottish Mortgage shares a bargain growth pick?

Scottish Mortgage shares have been on a steep downward track over the past six months. Down more than half, is…

Read more »

Note paper with question mark on orange background
Investing Articles

4 reasons why I would — and wouldn’t — buy Tesco shares for June

I’m looking for the best FTSE 100 shares to buy in early June. Is Tesco a brilliant blue-chip I should…

Read more »