UK shares are enjoying a purple patch right now. After rising strongly in 2024, the FTSE 100 is up 5.4% since the start of the year, beating the S&P 500 in the year to date.
It’s not just blue-chip UK stocks that are currently tearing higher. Shares of all types and sizes are gaining value as market confidence in the British economy improves, bolstering demand for domestic assets.
Yet the London stock market’s still a great place to pick up bargains. Here are three whose low price-to-earnings (P/E) ratios and enormous dividend yields make them, in my opinion, worth a very close look.
The copper miner
A sinking red metal price has pulled Central Asia Metals (LSE:CAML) shares sharply lower since last spring. The danger isn’t over, either, as China’s economy splutters and the threat of new trade tariffs grows.
Yet I think copper stocks like this could rebound strongly over the long term. Demand for the versatile metal — as well as lead and zinc, which Central Asia Metals also produces — is still tipped to rocket in the coming decades, reflecting its important role in fast-growing industries like renewable energy, consumer electronics, and artificial intelligence (AI).
Central Asia’s near-29% stake in Scottish explorer Aberdeen Minerals also gives it exposure to the nickel and cobalt markets. Its investment last year provides added scope for to capitalise on the energy transition.
Today Central Asia Metals trades on a forward P/E ratio of 7.3 times with a 10% dividend yield.
The greetings giant
Times are tough for the UK retail sector. Rising inflation and weak consumer appetite is hampering revenues, while labour and energy costs are creeping higher.
But I believe Card Factory (LSE:CARD), whose forward P/E ratio is 6.2 times and dividend yield is 6.1%, is an attractive dip buy to consider.
The firm’s focus on the low-cost end of the greetings card market helps revenues remain stable in good times and bad. Like-for-like sales rose 3.7% during the 11 months to December. The company is also making strong progress in cutting costs to support earnings.
With Card Factory’s store rollout programme continuing, and the business entering the US market last year, I think long-term earnings could grow strongly.
The care provider
Rising UK inflation could also cause turbulence at Care REIT (LSE:CRT). As a real estate investment trust (REIT), its earnings are highly sensitive to movements in interest rates.
Yet I believe the uncertain rate outlook is more than baked into the trust’s low forward P/E ratio of 5.5 times.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
With the business also sporting an 8.8% dividend yield, it’s a bargain share I myself am considering buying. That large yield partly reflects REIT rules, which stipulate 90% or more of annual rental profits be distributed to shareholders.
As a major care home provider, Care REIT has considerable long-term growth potential as Britain’s elderly population steadily rises. Average weekly fees here leapt 6.5% over the course of 2024, and could continue to increase strongly as demand ramps up.
