I’m looking for the best cheap UK shares to buy for next year. Should I invest in these low-cost stocks?
A tasty growth share
The turbulence striking the Turkish economy poses a risk to DP Eurasia (LSE: DPEU), the master franchisee of the Domino’s pizza brand in Turkey (as well as Russia, Georgia and Azerbaijan). Today the Turkish lira plunged to record lows and more weakness could be expected as the central bank there cuts rates.
It’s my opinion, though, that DP Eurasia could still enjoy strong profits growth next year. This is because the food delivery segment in its emerging markets is swelling rapidly, and this penny stock has the brand name to exploit this opportunity to the maximum.
City analysts think DP Eurasia’s earnings will leap 322% in 2022. This leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.1, well inside bargain-basement territory of 1. At these levels I’m seriously considering adding the company to my portfolio.
Cheap for good reason?
2022 growth projections over at De La Rue (LSE: DLAR) have also caught my attention recently. City analysts think earnings here will also rise more than 300% in the fiscal year to March 2022. This leaves the banknote printer trading on a forward price-to-earnings (P/E) ratio of 11 times.
A bleak outlook for cash, however, means I won’t touch De La Rue with a 10-foot barge pole. Technological improvements, from the advent of e-commerce to the development of contactless cards, have smacked note and coin circulation over the past decade. Concerns over infection have hit usage even further since the Covid-19 outbreak last year. And the rise of cryptocurrencies like Bitcoin is further damaging demand for physical money.
It’s why the Bank of England deputy governor recently commented that “cash is going to disappear” in a conversation about central-bank-minted digital currencies. De La Rue’s expertise in areas like passports and physical security labels could offer decent growth opportunities, of course. But in my opinion, these are could be offset by the threat to its traditional cash printing business.
A better cheap UK share
I think buying a gold producer like Serabi Gold (LSE: SRB) is a better idea for me. This particular UK mining share is anticipated to enjoy a 20% earnings rise in 2022. Consequently it trades on a rock-bottom forward P/E ratio of 4.8 times.
Gold demand is soaring today as concerns over runaway inflation and the ongoing Covid-19 crisis rattle investor nerves. Precious metals retailer The Pure Gold Company says the number of people buying its physical bars and coins has leapt recently. Numbers are up 278% in the past four weeks compared to the 2021 monthly average. I’m expecting yellow metal interest to remain strong into next year too, amid predictions that global inflation could head even higher.
That said, I’m mindful that gold prices can go down as well as up. Progress in the fight against the coronavirus, or an intense period of central bank rate rises could put gold prices under severe pressure. Still, it’s my opinion that these risks are reflected in Serabi Gold’s low valuation.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended De La Rue. 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.