I’m searching for the best low-cost UK shares to buy for my portfolio today. Here are two I’m considering investing in. Both trade just above penny stock territory.
A top stock for tough times
Building a truly-diversified shares portfolio means I have to include some counter-cyclical stocks in my purchases. This is because such companies build earnings even when economic conditions are tough.
Buying counter-cyclical shares is a particularly good idea today as soaring inflation smacks the UK and global economies. One such stock on my shopping list is FRP Advisory Group (LSE: FRP).
FRP is a giant in the field of corporate restructuring. It also provides other services to firms in distress, like debt advice and accounting.
Trading here picked up as 2021 progressed and UK companies began to feel the strain. Latest financials showed organic revenues rose 8% year-on-year in the six months to October.
A strong trading environment
Insolvency specialist Begbies Traynor suggests that firms like FRP could get much busier in the months ahead too. It predicts “a coming wave of business failures as the economy adjusts to the post-pandemic reality with Covid reliefs cut off and a rapid growth in inflation.”
Research from Begbies Traynor shows there were 1,891 British companies in critical financial distress in the first quarter. That was up 19% from the same period in 2021.
Expensive but exceptional
The trouble with buying FRP Advisory shares is the company’s meaty valuation. At a current price of 126.5p it trades on a forward price-to-earnings (P/E) ratio of 25.3 times.
Such a multiple could cause FRP’s share price to slip sharply if trading begins to disappoint. Extreme competitive pressures or improving economic conditions could lead to such a scenario.
Still, in my opinion, the potential benefits of owning this UK share outweigh these risks. And from a broader investing perspective I think it’s a great share to help me diversify my portfolio.
6.9% dividend yields!
I already hold Taylor Wimpey (LSE: TW) shares in my portfolio. And at the current price of 127.9p, I’m thinking of buying some more.
Not only does the housebuilder trade on a rock-bottom forward P/E ratio of just 6.5 times. This FTSE 100 stock also carries a mighty 6.9% dividend yield.
A FTSE 100 ‘nearly’ penny stock
I think Taylor Wimpey’s a top buy as UK house prices continue to rise at double-digit rates. Latest Nationwide data shows average property values rose 12.1% year-on-year in April.
Some have suggested that this shows that the housing market is slowing, however. April’s reading is down from growth of 14.3% recorded last month.
The threat of a cooling homes market is one I have to take seriously as Britain’s economy struggles. Still, I think the impact of this on Taylor Wimpey’s profits are reflected by the company’s ultra-low valuation. This is a ‘nearly’ penny stock I’d happily buy more of right now.
