3 UK shares under £5 that I’d buy

I don’t think investors like me need to spend a fortune to build a great stocks portfolio. Here are three top-quality, cheap UK shares I’m looking at today.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Newspaper publisher Reach (LSE: RCH) offers the sort of all-round value I’m finding hard to ignore. Okay, City analysts think earnings will creep just 1% higher in 2022. This follows an anticipated 11% increase for this year. But these projections still result in a rock-bottom price-to-earnings (P/E) ratio of just 7.2 times for next year.

The pace of the recovery in advertising spending continues to surpass most expectations as we close out 2021. I reckon they could continue to surprise in 2022 too, so there’s a good chance Reach’s earnings next year could end better than expected.

I wouldn’t just buy Reach for the ad industry rebound though. I’d also buy it because of the impressive progress it’s making to digitalise its operations. It has added an extra 1.3m reader registrations since the end of July, a trading update this week showed. I’d buy Reach despite the continued problem of falling circulation across its print operations.

Investing for future growth

Door, window and conservatory manufacturer Eurocell (LSE: ECEL) is another cheap UK share on my radar today. A robust housing market and strong consumer spending on home improvements is helping sales to soar. In fact, latest financials this week showed like-for-like revenues between January and October jumped 21% and 38% respectively, versus the same periods in 2019 and 2020. 

Eurocell isn’t just thriving because of bright market conditions however. Revenues are also ripping higher as it effectively steals market share from its competitors. Buoyant customer spending and these share grabs have prompted the business to raise profits forecasts at various times in 2021. Eurocell has invested heavily in new warehousing and to boost production capacity to keep this momentum going too.

City analysts think earnings will leap 200%+ in 2021 and by a further 7% next year. Consequently, Eurocell trades on a P/E ratio of 12 times for 2022, a reading I consider good value. I’d buy the company despite the threat posed to profits by rising input costs in the more immediate future.

A cheap UK share for the downturn

A troubling outlook for the British economy suggests that Manolete Partners (LSE: MANO) should witness rising demand for its services. This UK share finances insolvency litigation cases, an industry which I think could grow in 2022 as the number of companies hitting the rocks is unfortunately likely to rise.

Government support for business has suppressed the number of corporate insolvencies during the public health crisis. But even so, Manolete saw case completions rise 23% in the six months to September, latest financials showed. And it said that it’s witnessing “a sharp increase both case enquires and signed cases” since temporary government measures ended on 1 October.

Researchers at Atradius are expecting insolvency levels in the UK to be 33% higher in 2022 compared with pre-pandemic levels. This is the second-highest rate in the world, level with Australia and behind only Italy (where insolvencies are tipped to soar 34%).

So I’m thinking of buying Manolete shares, despite the risk of unfavourable decisions on the litigation cases it finances.

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 assessed. 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

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

If I’d put £10k in BAE Systems shares 10 years ago, here’s what I’d have now

BAE Systems shares have been on fire over the last decade. But just how much would a £10k investment back…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

My favourite S&P 500 stock is still potentially 52% undervalued

The S&P 500 is where many investors look for the next opportunity, but one of my favourites might just be…

Read more »

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

Here’s why I’m watching the Glencore share price

The mining sector has always been volatile, but with some recent strategic moves, I'm watching the Glencore share price even…

Read more »

Young black female footballer training on stadium pitch
Investing Articles

My JD Sports Fashion share price prediction for the second half of 2024

The JD Sports Fashion share price hasn't yet recovered from January’s slump. So will the retailer's stock bounce back in…

Read more »

Investing Articles

Up 47% in a week! Can the Capita share price continue to rocket?

The Capita share price has smashed the market in the last week, and Harvey Jones wonders whether it has the…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

What could the second half of 2024 have in store for the BAE Systems share price?

After a strong first six months of the year, what could be coming next for the BAE Systems share price?…

Read more »

Growth Shares

2 FTSE 100 stocks that are outperforming these MAG7 members

Jon Smith reveals some FTSE 100 stocks that offer him a viable alternative to the Magnificent 7, based on recent…

Read more »

Investing Articles

My Scottish Mortgage shares just paid me £14.88. It’s another step towards making a million

Harvey Jones has just received a measly dividend from his Scottish Mortgage shares, but he's got big, big plans for…

Read more »