I’m thinking of adding these cheap UK shares to my portfolio. Here’s why.
It might not be plain sailing over at Wincanton (LSE: WIN) as the economy cools and fuel costs soar (diesel hit a new record above 178p this week).
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But I believe the opportunities for the distribution giant are good enough to overlook the issues as e-commerce grows. Latest financials showed ‘eFulfilment’ revenues up 56% in the 12 months to March. And Wincanton said that “the medium-term outlook for online eFulfilment remains strong” last month too.
The stock’s acquisition of Cygnia last autumn has boosted its ability to capitalise on the online shopping boom as well. Internet sales have been booming following the pandemic and Britain had the highest rate of e-commerce penetration worldwide last year according to Mastercard.
Today Wincanton trades on a price-to-earnings (P/E) ratio of just 9.8 times.
Growing market share
Marketing merchandise business 4Imprint Group (LSE: FOUR) faces near-term turbulence as consumer confidence in the US weakens. The business sources almost all profits from North America.
Consumer confidence in the States has sunk to 11-year lows, data this week showed. The mood threatens to get worse as inflation rises too, threatening company spending on marketing.
However, as a long-term investor I’m still excited by 4Imprint’s investment case. The stock makes mugs, umbrellas, T-shirts, pens and an assortment of other objects on which firms put their company or product name.
This is a market that’s growing rapidly due to its better cost-effectiveness versus traditional advertising. And it’s one in which 4Imprint is growing market share from a very low base. McKinsey & Company puts its share at just low-single-digit percentages.
Most recent financials showed 4Imprint’s orders in North America up 11% between January and April versus the same 2019 period. Right now this cheap UK share trades on a forward price-to-earnings growth (PEG) ratio of 0.6.
I think Motorpoint Group (LSE: MOTR) shares could be a wise investment as the shortage of new cars in the UK worsens.
Huge supply problems concerning components like semiconductors are hitting auto production hard. A knock-on effect is that demand for pre-owned vehicles is surging, an industry Motorpoint specialises in. The problem is getting worse amid a Covid-19 resurgence in China, meaning the prices Motorpoint and its competitors are charging continue to rise.
Latest data from the Society of Motor Manufacturers and Traders showed used car sales rose 5.1% in the first quarter of 2022. Motorpoint is growing the number of branches it operates to make the most of this opportunity and deliver long-term profits growth. In the six months to March alone the company opened three new sites.
Today Motorpoint trades on a forward PEG ratio of just 0.1. Despite the intense competition it faces I think it could be too cheap for me to miss.