3 cheap UK shares to buy with £1k

These UK shares look incredibly cheap compared to their growth potential over the next couple of years, says this Fool, who would buy all three.

| 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.

Senior woman wearing glasses using laptop at home

Image source: Getty Images

Following the recent bout of stock market volatility, I have been looking for cheap UK shares to add to my portfolio. As the UK economy begins to recover from the pandemic, I think these shares have the potential to benefit from both a valuation and growth uplift in the years ahead.

With that in mind, I would acquire all three of the stocks outlined below for my portfolio today with an investment of £1,000. 

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

UK shares with growth potential

The first company on my list is the technology retailer Currys (LSE: CURY). I have been watching this business for some time, as the group has been undergoing a significant restructuring over the past couple of years.

It looks as if these restructuring efforts are now beginning to pay off. According to the latest projections from the company and City analysts, the group’s net income will hit £133m in 2022 and £179m in 2023. This puts the stock on a 2023 forward price-to-earnings (P/E) multiple of 6.7. 

Unfortunately, due to the uncertainties of the retail industry, this growth is not guaranteed. Any number of factors could cause the enterprise to miss these projections, including inflation pressures and a deterioration in consumer confidence. 

Still, considering the company’s growth potential and cheap valuation, I think this is one of the best UK shares to buy with £1,000 today. 

Market expansion

I do not think any article on cheap UK shares would be complete without mentioning a homebuilder. Shares in Bellway (LSE: BWY) are currently selling at a forward P/E multiple of just 7. Despite the booming UK housing market, the stock is trading at this depressed level. 

Investors have been selling the shares as they are concerned about its exposure to the cladding scandal. All builders face significant financial penalties due to the sector’s involvement in the scandal. This could be a considerable risk to the company, and it is something I will be keeping in mind. 

However, considering the state of the UK housing market and the fact that demand is outpacing supply, I think the corporation should be able to overcome any short-term headwinds with long-term growth. 

As well as the company’s cheap valuation and growth potential, the stock also offers a dividend yield of 4.5%.

Trading giant

The buying and selling of UK shares can be a lucrative business, especially during periods of market volatility and uncertainty. This is why I would buy CMC Markets (LSE: CMCX).

The financial trading firm allows investors to bet on the direction of markets using derivatives and other products. It takes a tiny slice of profit from each trade. All of these little transactions add up to big profits. 

The biggest challenges the company faces are regulation and competition. Dealing with regulatory and competitive forces could significantly impact profit margins and growth.

Despite these risks, the stock sells at a forward P/E of 9.3 and offers a dividend yield of 4.2%. With a cash-rich balance sheet and further growth projected, I think the stock has huge potential over the next few years. 

More on Investing Articles

Black father holding daughter in a field of cows
Investing Articles

Could my Stocks and Shares ISA generate £30,000 a year?

Over 2m UK citizens make some use of a Stocks and Shares ISA every year. Our writer considers if it’s…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

4 dividend stocks that can help me fight inflation!

I'm looking at dividend stocks to help my portfolio grow and overcome the impact of high inflation. Here are the…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 bargain UK shares trading at less than book value

Book value is a great way to value a stock. These UK shares are trading at a price-to-book ratio of…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

A FTSE AIM stock I’d add to my Stocks & Shares ISA in July

Henry Adefope highlights a FTSE AIM stock he believes could generate significant upside for his portfolio if he buys this…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’m following Warren Buffett and buying cheap dividend shares to build my wealth

I think this cheap dividend stock exhibits similar qualities to the companies Warren Buffett has in his investment portfolio.

Read more »

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

2 cheap FTSE 100 shares I’m buying during the dip!

Andrew Woods explains that low P/E ratios and profitable businesses attract him to these two FTSE 100 shares.

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Down 45% in a year, is now the time to buy Scottish Mortgage shares?

Jon Smith explains why Scottish Mortgage shares appear to him to be good value given their post-pandemic fall.

Read more »

Tabletop model of a bear sat on desk in front of monitors showing stock charts
Investing Articles

3 reasons why the stock market is falling today

Jon Smith explains several factors that are contributing to the stock market falling today, and his thoughts on them.

Read more »