2 cheap UK shares that cost less than a cup of coffee!

I’m searching for the best cheap UK shares to add to my shares portfolio. Here are a couple of bargains (including a top penny stock) that I’m eyeing up.

| 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.

Large coffee

Source: Getty Images

I believe in the general theory that buying cheap can often become expensive. But in the world of investing I think that seeking cheap UK shares to buy can be a good idea. Certainly for my long-term portfolio.

Low-cost UK shares can often experience extreme share price volatility, though this doesn’t put me off. This is because I buy stocks with a view to holding them for the long haul, say a decade or more. History shows us that, over this sort of timescale the cream usually rises to the top. I can be confident that, with the right research, the shares I buy will rise over a period of years. That’s irrespective of what I paid for them in the first place.

Here are three top, cheap UK shares I’d buy to hold all the way to 2030. They all cost less than a £2.40 cup of coffee from your usual high street chain, too.

A cheap UK share for the gaming boom

You might think that the video games industry peaked last year as Covid-19 lockdowns boosted software sales. If that’s the case you’re likely to be proved wrong. Research firm Global Industry Analysts for one expects the global games market to top $293bn by 2027. That represents annualised growth of 9.3% between 2020 and then.

I think buying tinyBuild (LSE: TBLD) shares is a good way for me to play this theme. This UK tech share has published 40 games across PC, consoles, and even mobiles. And it has almost 30 more titles in development with which to exploit the gaming boom. I am aware, though, that games development is an extremely tough business, and problems on this front can play havoc with a company’s profits.

The colossal problems that developer CD Projekt is still having with Cyberpunk 2077 almost a year after launch is evidence of this. I’m not suggesting that tinyBuild is about to suffer similar misfortunes. But its big valuation means that its share price might fall if such issues appear. Today this UK share’s forward P/E ratio sits above 42 times.

A top penny stock

I think grabbing a slice of the residential property rentals market is a great, lower-risk idea. Rents are heading though the roof (no pun intended) because of a severe shortage of available homes. According to Zoopla, tenant costs jumped 4.6% year-on-year in September. This was the biggest jump seen since 2008.

I’d buy The PRS REIT (LSE: PRSR) to ride this theme, a real estate share that falls inside penny stock territory at 97p. This is even though the cost of building its homes could continue spiralling higher if material shortages persist. It will take many years for the drought of rental homes to be cured in Britain, meaning that this share can look forward to strong and sustained profits growth.

Today, PRS REIT trades on a rock-bottom forward P/E ratio of 8.3 times. This, combined with its 5.2% dividend yield makes it excellent value for money in my book.

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.

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 white man pulling an aggrieved face while looking at a screen
Investing Articles

Is another stock market crash on the way?

The US stock market has already crashed in 2022, losing 25% of its value at its June low. However, UK…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

A 6.2% FTSE 100 dividend stock I’d buy to boost my income

This FTSE 100 dividend stock offers a yield well above the index average. Here's why I'd buy it to supercharge…

Read more »

Abstract 3d arrows with rocket
Investing Articles

2 beaten down FTSE 100 shares that look ready for liftoff 

With the UK market showing strong signs of recovery, I am considering these two overlooked FTSE 100 shares for my…

Read more »

Smartly dressed middle-aged black gentleman working at his desk
Investing Articles

3 top UK shares for August 2022 and beyond

I've been buying top UK shares since late June such as these three companies that look attractive right now.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

FTSE 100 live: the Footsie closes on 7,500

The Footsie, like many other global markets, has been pretty volatile in recent months, but today it almost closed above…

Read more »

Woman using laptop and working from home
Investing Articles

High-dividend stocks! Should I buy Royal Mail’s shares for its 7.3% yield?

The Royal Mail share price carries a dividend yield twice as large as the average for UK shares. Does this…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

UK shares: should I buy this oil and gas infrastructure stock?

Jabran Khan is looking for the best UK shares for his holdings. Could this oil and gas infrastructure provider fit…

Read more »

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

This REIT could be the perfect stock to supercharge my passive income stream!

Jabran Khan is looking for stocks to boost his passive income through dividend payments. He identifies one REIT to help…

Read more »