I’ve got £2k and I’m on the hunt for cheap shares to buy in December

Harvey Jones finally has some cash in his trading account and is hunting for cheap shares to buy next month. The following three FTSE 100 stocks all tempt him.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Surprised Black girl holding teddy bear toy on Christmas

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.

Recent FTSE 100 volatility has offered me plenty of opportunities to buy cheap shares, but one thing has held me back. A lack of readies.

I love hunting around for bargain stocks but it’s not as much fun if I don’t have the cash in my account to buy them. And that’s been the case lately, with my Self-Invested Personal Pension fully invested.

I’ve just freed up £2,000 by selling a stock I wish I hadn’t gone anywhere near. I offloaded this morning, which means I can’t reveal what it is. Under strict Motley Fool trading rules, we’re not allowed to write about stocks within two working days of buying or selling them.

Should you invest £1,000 in HSBC right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC made the list?

See the 6 stocks

I’m on a FTSE 100 bargain hunt

What I can discuss is which stocks I’m keen to buy. I’ll spend a few days looking, so this isn’t a definitive list.

My first thought was to invest in two portfolio holdings I don’t regret buying, even though they’re both in the red. The first is trainer and sports retailer JD Sports Fashion, whose shares have been hit by falling consumer spending in the US, problems afflicting key partner Nike, fears over Trump tariffs, and the Budget national insurance raid on employers.

Created with Highcharts 11.4.3JD Sports Fashion PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The JD Sports share price is down 31.75% over 12 months. I’m tempted to make my paper loss look nicer by averaging down. It shares look super cheap trading at just 8.33 times earnings.

I’m also tempted by another big portfolio loser, luxury fashion disaster Burberry Group. It shares are down 39.41% over the last 12 months, after sales slumped due to falling demand from China, and pretty much everywhere else. The Burberry brand also lost its way but new CEO Joshua Schulman has a credible plan to get it back on track and the shares are up 29.48% in the last month.

Created with Highcharts 11.4.3Burberry Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Trading at 12.48 times earnings, the Burberry share price isn’t quite the bargain it was. I’d happily average down on both stocks but then my £2k will have gone and I want to take my time over this. There are so many FTSE 100 bargains out there right now.

HSBC Holdings looks stunning value

There’s HSBC Holdings (LSE: HSBA). I don’t hold this stock but I’ve been thinking about buying it for ages. The Asia-focused bank is a money making machine. It posted a reported profit before tax of $30.3bn in full-year 2023. That was up 78% on the previous year, so it’s growing rapidly too.

The board paid share buybacks of $7bn over the year, then blithely served up another $2bn for the first quarter of 2024. Then $3bn in both Q2 and Q3, after profits continued to beat already upbeat expectations.

The HSBC share price is up 20.8% over 12 months, yet still looks great value trading at just 8.01 times earnings. Plus there’s a bumper trailing yield of 6.68%.

Created with Highcharts 11.4.3HSBC Holdings PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Why so cheap? Investors are concerned by the fears of a trade war between China and the West. The board is trying to ease their fears by dividing operations into two. Let’s see if that helps. Another concern is that falling interest rates may squeeze net interest margins.

I’ll stop right there. I reckon I’ve found the cheap share I’m going to buy. Although now I’ve written about it, I’ll have to wait a couple of days.

Should you buy HSBC now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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 has positions in Burberry Group Plc and JD Sports Fashion. The Motley Fool UK has recommended Burberry Group Plc and HSBC Holdings. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Can the Rolls-Royce share price hit £13 in the coming year?

After a stunning couple of years for the Rolls-Royce share price, can it keep up its recent momentum? This writer…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »