UK shares still look cheap despite the stock market rally. I’d buy these 2 now

I think top UK shares listed on the FTSE 100 still look good value despite the recent recovery and I would buy a couple of them today.

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2022 has been a surprisingly good year for blue-chip UK shares with the FTSE 100 defying the global downturn. Wall Street crashed but London did not burn.

Now the FTSE 100 has started to rise, up 6.55% in the last month. Year to date, it is broadly level. I am happy because I embarked on a buying spree recently, purchasing Persimmon, Rio Tinto, and Rolls-Royce in short order. 

At the time, the FTSE 100 had dipped below 7,000, and I thought they looked unmissable value. These are early days but so far, I feel vindicated. All three are up 10% or more since I bought them.

UK shares are on the up

I am keen to add to my recent purchases, and a number of top stocks are now lined up on my watchlist.

These days I am mostly buying dividend stocks. Ideally, those trading at low valuations with high dividend income yields. Aviva is near the top of my shopping list, with Unilever close behind. Both UK shares are market stalwarts, that I would be happy to buy at any time. But I would particularly like to buy when they are trading on low valuations, and offer maximum possible dividends.

Yet as I write this, the FTSE 100 has climbed to 7,475. While it still looks cheap, it is not as cheap as it was a month or so ago. The same applies for Aviva and Unilever, whose share prices have jumped 9.29% and 4.93% respectively over the last month.

Both stocks still look good value to me. Particularly Aviva, which is trading at 8.09 times earnings (a P/E of 15 is considered fair). Unilever looks more expensive, trading at 18.30 earnings, but for years it rarely fell below 24 times.

They were cheaper a month ago but sadly, I cannot go back in time and buy them at the old price. I could always delay my purchases, I suppose, crossing my fingers and hoping the FTSE 100 will fall back to where it was.

However, experience tells me that hanging on for the perfect time to buy is a mug’s game. For some reason, it never seems to arrive. There is another disadvantage to waiting. The FTSE 100 may climb higher, as could the Aviva and Unilever share prices. 

Always a good time to buy FTSE 100 stocks

Another downside to hanging around is that my money will sit idly in the bank earning next to nothing while I wait for the ideal moment to invest. Also, I will also miss out on any dividends these stocks pay in the interim.

When I buy FTSE 100 stocks, I aim to hold them for a minimum of 10 years, and ideally much longer than that. It’s nice to buy at the bottom of the market, but given that lengthy investment timeframe, hardly essential.

Aviva is a solid business but the attraction is the dividend, rather than share price growth. Unilever still has a long haul ahead of it, before it recovers recent glories. The real benefits of buying either stock will be measured over years, rather than weeks.

So forget that they were a bit cheaper a few weeks ago. What really matters is that both these UK shares still look good value today. I will buy them as soon as I have the cash.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones holds shares in Persimmon, Rio Tinto and Rolls-Royce. The Motley Fool UK has recommended Unilever. 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.

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