Cheap UK stocks are soaring! Here’s 1 to consider buying now

In recent weeks, many UK stocks have surged. Here, Edward Sheldon highlights a blue-chip FTSE 100 share he believes could soon rip higher.

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After years of underperformance, UK stocks are finally enjoying a period of strength. Across the market, cheap stocks are rising spectacularly, generating huge returns to investors.

The good news is that it’s not too late to get in on the action. With many stocks still trading at super-low valuations, there could be plenty more gains to come in 2024.

Big returns in the Footsie

The gains from UK stocks are coming from all areas of the market right now. At the top end, a lot of FTSE 100 stocks are flying.

According to my data provider, around 20% of FTSE 100 stocks have jumped 10% or more in the last month alone. That’s incredible.

BT Group – which I highlighted as an interesting value play a few weeks ago – has been one of the best performers. It’s up about 20% over the last month.

Massive gains from smaller companies

In the mid-cap and small-cap areas of the market, some of the gains have been huge. Take FTSE 250 IT company Kainos, for example. This stock – which I hold in my own portfolio – is up around 30% in a month, thanks to strong results.

Another good example is video gaming company Keywords Studios. Only a few weeks ago, I noted that this stock was dirt cheap and that a broker was expecting big gains in the medium term. Since then, it’s received a takeover offer, sending its share price up about 60%.

A cheap stock to look at now

Now, as I mentioned earlier, there are still a lot of cheap stocks on the London Stock Exchange. And one that stands out to me is Asia- and Africa-focused insurer Prudential (LSE: PRU).

Its shares have had a dreadful run over the last few years due to the fact that the company has a lot of exposure to China, which has been experiencing economic weakness. Recently, the shares hit 10-year lows.

But China’s economic outlook’s beginning to improve (Q1 GDP growth was a healthy 5.3%). And with the company performing well in other markets such as Thailand, Taiwan, and India, I think there could be an opportunity for long-term investors like myself here.

Looking at the valuation, Prudential shares are cheap. With analysts expecting earnings per share (EPS) of 96 cents this year, the forward-looking P/E ratio here is only 10.4.

Given that its EPS is forecast to rise about 55% this year, and that the company operates in markets that have a lot of long-term growth potential, I think that multiple’s very attractive.

Of course, China’s a risk here. If the world’s second-largest economy experiences further weakness, Prudential could suffer setbacks.

With the stock currently trading more than 50% off its highs however, I’m optimistic about its prospects.

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.

Edward Sheldon has positions in Kainos Group Plc, London Stock Exchange Group Plc, and Prudential Plc. The Motley Fool UK has recommended Kainos Group Plc and Prudential Plc. 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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