I believe there is currently an unmissable opportunity to buy discounted UK shares before a market recovery.
UK shares struggle
Macroeconomic issues in the UK, including soaring inflation and rising interest rates, have spooked investors. Furthermore, a cost-of-living crisis has developed in the UK. Another factor to mention is the war in Ukraine, which has hindered global markets. The FTSE 100 is down approximately 2% over a 12-month period.
I’ve been looking for quality stocks to buy cheaper than usual now, as I believe a bull run could occur eventually. I do understand that there is no guarantee of a bull run but history has taught me that any stock market volatility is usually followed by a recovery of some sort.
I’ve identified two UK shares I like the look of that trade at a discount. I would buy some shares when I have some cash to invest.
National Grid
National Grid (LSE: NG.) owns, operates, and maintains the gas and electric transmission system in the UK.
As I write, National Grid shares are trading for 992p. At this time last year, they were trading for 1,124p, which is a 11% drop over a 12-month period.
I believe National Grid has defensive capabilities. After all, it is the only company of its kind in the UK and electricity and gas are essential for everybody. A lack of competition means it can generate stable earnings and provide solid investor returns.
National Grid shares look dirt-cheap right now on a price-to-earnings ratio of just four. For context, the FTSE 100 average is 14.
Furthermore, National Grid shares would boost my passive income with a dividend yield of over 5.5%. However, I do understand that dividends are never guaranteed.
An issue I must note that could impact National Grid is the capital outlay it could face updating its infrastructure. This is linked to maintaining existing infrastructure as well as the move away from traditional fossil fuels towards cleaner energy alternatives. Major expenditure on such initiatives could hinder investor returns.
Overall I believe National Grid is one of a number of UK shares trading at a discounted level due to recent volatility and would boost my holdings.
Phoenix Group
Phoenix Group Holdings (LSE: PHNX) is one of the largest long-term savings and retirement businesses in the UK.
As I write, Phoenix shares are trading for 518p. At this time last year, the shares were trading for 597p, which is a 13% drop over a 12-month period.
From a valuation perspective, Phoenix shares also look cheap on a price-to-earnings ratio of just six.
Phoenix shares would boost my passive income with a dividend yield of 10%, one of the highest-yielding UK shares out there. Furthermore it has a great record of dividend payout as well.
An ageing population in the UK could boost its future earnings and investor returns. From a bearish perspective, retirement saving and life insurance aren’t essential requirements. This means shorter-term demand could fall due to the current cost-of-living crisis. In turn, performance and payouts could be impacted.
Overall I like Phoenix’s current cheap valuation, strong market presence, and its passive income opportunity.
