2 cheap UK shares I reckon investors should consider adding to their portfolios this month!

After posting strong performances in recent times, this Fool thinks these two UK shares could be worth considering in July.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

UK shares can’t seem to slow down. The FTSE 100 has made an epic recovery since it nosedived to 5,190.8 points at the outbreak of the pandemic. It’s reached new highs this year and I reckon it could have a lot further to go.

That’s because many UK-listed companies, despite the recent rally, still look undervalued. Investor sentiment surrounding the domestic stock market seems to be rising. With that, I reckon it’s time to go shopping.

That’s not to say that there won’t be volatility. Interest rate cuts and inflation will still have a large influence over market performance.

But there’s an abundance of cheap buying opportunities to explore at the moment. Here are two I think investors should consider. If I had the cash, I’d buy them today.

Marks and Spencer

Shares in retail giant Marks and Spencer (LSE: MKS) have seen a decent performance so far this year after a strong 2023. Year to date, they’ve climbed 5.4%.

However, after falling 5.9% across the last month, I think this could be a buying opportunity. Its shares now trade on 14.1 times earnings. In my eyes, that’s decent value for a business of Marks and Spencer’s stature.

The retailer had massively fallen behind its competitors in recent years. Outdated stores and products saw it struggle to keep up. But with a new turnaround strategy in place, led by CEO Stuart Machin and his predecessor Steve Rowe, it’s flying.

I still see it facing issues. The cost-of-living crisis is one. A downturn in the economy could see people cut back on spending. Competition also remains a threat.

But with interest rate cuts expected over the coming months, I think the retail sector should be provided with an uplift as spending hopefully begins to pick up again. That should offer the stock a boost.

Barclays

I also continue to like the look of Barclays (LSE: BARC). Since first buying its shares back in August last year, I’ve enjoyed decent success. But even after rising 41.9% so far this year alone, I’m planning on buying more shares.

The stock looks dirt cheap. Right now, it’s trading on 8.6 times earnings. Barclays’ price-to-book ratio is just 0.4, where 1 is considered fair value. It’s for reasons like this that analysts have a 258.9p 12-month target price on the stock. That’s a 17.4% premium to its current price.

After years of lagging behind the competition, back in February, the bank announced a cost-cutting plan that will help it save billions over the next couple of years. As part of this, it’s streamlining its operations down to just five divisions.

The nearest threat is falling interest rates. As they drop, this will squeeze Barclay’s margins. What’s more, Barclays generates a good chunk of its revenue from the UK. So, ongoing economic uncertainty in the months ahead could harm its share price.

But I’m hoping over the years to come that falling rates will more widely boost investor sentiment. Plus, I can make some passive income through its 3.9% dividend yield, which will tide me over should the stock encounter some short-term volatility. Over the next three years, the firm plans to return up to £10bn to shareholders via dividends and buyback schemes.

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.

Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays 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.

More on Investing Articles

Investing Articles

Could this beaten-down UK growth stock be the next Rolls-Royce?

Mark Hartley feels Rolls shares have had their time and are running out of steam. Now he’s searching for the…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Down 10% in a month! What’s gone wrong with the BAE Systems share price?

Harvey Jones suspected all was going a bit too well for the BAE Systems share price. Things went wrong immediately…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Are BT shares still a bargain after climbing 30%?

BT shares are finally showing signs of life after years in the doldrums. Harvey Jones thinks this may point to…

Read more »

Investing Articles

£10k in an ISA? Here’s how I’d aim to generate a ton of passive income

I dream of escaping the shackles of a salary with financial independence and a steady stream of passive income. Here’s…

Read more »

Investing Articles

Are Burberry shares a bargain or a value trap?

Appearances can be misleading in the stock market. Shares that look like a bargain can turn out to be a…

Read more »

Investing Articles

How I’d target £17,673 passive income with just £100 a week

Our Foolish writer explains how he’d build a portfolio capable of generating a life-changing passive income with limited capital.

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

If I’d put £20k into a FTSE All-Share tracker fund 10 years ago, here’s what I’d have now

A lot of UK investors have money in FTSE All-Share tracker funds. Here, Edward Sheldon looks at how these products…

Read more »

Investing Articles

How I’d invest £10k in a SIPP to target £28,000 annual passive income

Investing just £10k today in a SIPP could be the key to a chunky retirement income in the long run.…

Read more »