Growing stormclouds over the global economy have bashed UK share prices in 2022. Worries over the British economy in particular has weighed on companies across the FTSE 250.
Down 27% this year, I think the London Stock Exchange’s second-tier index is now packed with brilliant value stocks. Here are two dirt-cheap shares on my shopping list today.
Begbies Traynor Group
I’m surprised to see the Begbies Traynor Group (LSE: BEG) share price trekking lower again. This is a UK share which stands to gain from the spluttering UK economy.
Begbies Traynor is an expert advisor when it comes personal and corporate insolvency. It also provides services in other fields including restructuring, capital management, and corporate finance.
In other words, when businesses start to struggle, this one comes alive. Last month it advised that it had made “a good start” to the financial year ending April 2022 “with encouraging activity levels” across the company.
Latest data from the Office for National Statistics suggest the FTSE 250 firm will get a heck of a lot busier in the months to come too.
Due to surging energy costs, total company insolvencies hit 5,629 in the second quarter. This was the highest level since 2009 when Britain’s economy was suffering from the shockwaves of the global economic crisis.
Begbies Traynor operates in a highly competitive industry. But the company’s long history of unbroken double-digit earnings growth — helped in part by frequent acquisitions — shows how effective it’s been in neutralising this threat.
City analysts expect annual earnings to grow another 9% this year too. That leaves it trading on an undemanding forward price-to-earnings (P/E) ratio of 13.2 times.
Safestore Holdings
Property stocks like Safestore Holdings (LSE: SAFE) have been smacked by the flight from UK assets during the last week. I consider this to be a great opportunity to grab a bargain.
Okay, falling consumer spending power presents a threat to self-storage businesses. So do rocketing interest rates as they weigh on the housing market. Home movers account for a significant chunk of revenues for the likes of Safestore.
But it’s my opinion that these dangers are baked into the FTSE 250 firm’s low valuation. City brokers think earnings will jump 40% in this financial year (to October). This results in a forward price-to-earnings growth (PEG) ratio of just 0.4. A reminder that any reading below 1 suggests a stock is undervalued.
As a potential investor, I’m highly reassured by Safestore’s latest trading update. In September, it said that like-for-like revenues were up 9.5% in the three months to July, with like-for-like enquiries in August “at record levels”.
Analysts think the UK self-storage market will grow at an annualised rate of 7.5% between now and 2027. This will give Safestore a terrific opportunity to supercharge its profits.
