3 cheap UK shares on my March shopping list

Our writer looks at a trio of UK shares he thinks offer him attractive value right now, considering their long-term business prospects.

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With March beginning tomorrow, I am looking ahead and considering what UK shares I might add to my portfolio in the coming month. While the FTSE 100 has been going gangbusters, there remain some solid bargains in the London market, in my opinion.

Here are three UK shares I would happily buy in March if I had spare money to invest.

Superdry

The fashion retailer Superdry (LSE: SDRY) has been a dismal choice for many investors. The shares are down 37% over the past year and over 90% on a five-year timeframe. Last month, the company downgraded its forecast. It now expects adjusted pre-tax profit to be broadly breakeven for the year, whereas previously it had been pegged at £10m–£20m gain.

Despite that – or perhaps because of the share price tumble – the company’s chief executive has dipped into his own pocket on several occasions this month to top up his holdings.

The company has been growing sales. I think its distinctive design style retains a large following of consumers who are somewhat insulated against the worst of the cost-of-living crisis. That bodes well for future revenues and profits. With a market capitalisation of just over £100m and net debt of £38m, the company looks cheap to me.

Next

Clothing retailers seem to be out of fashion at the moment judging by the price of some UK shares in the sector! Not only does Superdry look cheap to me, so too does Next (LSE: NXT).

The shares sell at the same price they did a year ago, putting Next on a price-to-earnings (P/E) ratio of 13. I think that is good value for such a high-quality operator with a long track record of excellent financial performance. Last year, post-tax profits came in at £678m on revenues of £4.4bn.

Cost inflation remains a threat to profit margins. I also see a risk that consumers tightening their belts could mean spending on clothes falls. But with its strong brand, large customer base and deep experience of the fashion industry, I see Next as a company with a bright long-term future.

An even lower P/E ratio can be found at insurer Legal & General (LSE: LGEN) of just eight.

But I think the well-known financial services brand has a lot to offer me as an investor. It has a strong position in a market and I expect it to benefit from resilient customer demand. It is massively profitable, with post-tax earnings last year topping £2bn.

I can also benefit from the strong dividend offered by Legal & General. The dividend yield is currently 7.2% and I expect the annual payout to rise in line with the firm’s policy, although that is never guaranteed.

One risk is choppy markets leading to some investors withdrawing funds, hurting profits. Taking the long view, however, I would be happy to hold this blue-chip business in my portfolio of UK shares.

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.

C Ruane has positions in Superdry Plc. The Motley Fool UK has no position in any of the shares mentioned. 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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