I’m searching for the best cheap UK shares to buy right now. Here are two sub-£5 stocks I think could help supercharge returns from my shares portfolio.
A FTSE 100 stock on my shortlist
Soaring demand for athleisure/sportswear has lifted JD Sports Fashion’s (LSE: JD) share price through the roof. At 225p per share, the retailer’s 40%-plus more expensive than it was a year ago. Yet, on paper, it still seems to offer exceptional value for money.
Forecasters think that JD’s earnings will surge 58% in this financial year. This leaves it trading on a forward price-to-earnings growth (PEG) multiple of 0.4. This is well inside the widely-regarded watermark of 1 and below that suggests a stock could be undervalued.
JD Sports is no flash in the pan. The FTSE 100 share is 250% more expensive than it was half a decade ago. Not only is it benefitting from soaring demand for people seeking out comfortable clothing. The company’s global expansion plan that has seen it enter the US more recently is also delivering exceptional rewards.
I’m also encouraged by JD Sports’ successful move into online shopping, one I think could light a fire under profits as the e-commerce boom continues apace.
Ok, fashion trends can change quickly and JD’s sales could rapidly fall out of favour with consumers but, at current prices, it remains a great cheap UK share for me to buy.
Another cheap UK share I’m considering buying
Video game developers like tinyBuild (LSE: TBLD) look set to have a bright future as demand for leisure software accelerates. The global games market is already bigger than the movie and music sectors combined. And the experts at Statista think it’ll be worth a shade below $269bn by 2025. That compares with the $178.4bn it’s currently valued at.
The ramping up of Covid-19 lockdowns across the globe could boost growth rates even further too. Gaming activity ballooned in 2020 as quarantined people searched for ways to entertain themselves. Turnover at the Overcooked and Hello Neighbor publisher soared 35% last year as a result.
I’m also encouraged by tinyBuild’s commitment to acquisitions to deliver future profits growth. Its latest foray saw it snap up US publisher Versus Evil and Sao Paolo-based games service provider Red Cerberus in November.
The move bulks up tinyBuild’s position in the RPG and strategy games genres and provides improved recruitment possibilities in South America.
A word of warning. The video games market is highly competitive and a disappointing review of a tinyBuild title could have serious ramifications for future revenues.
On balance though, I think tinyBuild remains highly attractive from a reward-to-risk perspective. At current prices of 195.5p per share, the software star trades on a PEG ratio of 0.6. At these prices I think it could be too good for me to miss. City analysts think earnings will soar 50% in this financial year alone.
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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.