Let’s get straight to the point. I think investors should consider these cheap shares to buy next month and here’s why.
Rising again
Iron ore miners like Rio Tinto (LSE:RIO) have recently risen sharply in value. This is thanks to improving demand signals for the steelmaking ingredient, and more specifically from within China.
The Asian country’s position as major manufacturing hub sees it consume around three-quarters of the world’s iron ore. Economic data from there has been patchier of late, with factory activity slumping at its fastest pace for two-and-a-half years in May amid US tariff uncertainty.
Trade policy uncertainty remains a threat. But signs of progress between the US and other trading nations (including China) in recent weeks suggests things could be looking brighter. This is critical for Rio Tinto, which sources 70% of earnings from the metal.
Producers of high-grade iron ore like Rio also stand to gain from China’s plans to improve the emissions and efficiency of its steel mills.
Iron throne
Encouragingly, the FTSE 100 firm’s focusing increasingly on assets with higher-ore grades to capitalise on this decarbonisation theme and boost long-term growth. Its Simandou project in Guinea, for instance, has an average Fe content of 65-68%, well above the industry benchmark of 62%. This is considered one of the largest untapped sources of high-grade iron ore on the planet.
Trends like decarbonisation, the growing digital economy, rising defence spending, and ongoing urbanisation all bode well for industrial commodities demand. And thanks to its sheer scale — it has roughly 65 projects spread across 35 countries — Rio’s well-placed to seize this opportunity.
I don’t believe these long-term opportunities are baked into Rio Tinto’s low share price. At £47.38 per share, it trades on a forward price-to-earnings (P/E) ratio of 9.9 times.
Combined with a 5.7% dividend yield for 2025, I think it’s a 5.7% great value share to consider.
Gold star
Hochschild Mining‘s (LSE:HOC) another dirt cheap commodities producer that’s attracted my attention. Powered by buoyant gold and silver prices, I’m confident it can continue rising as macroeconomic and geopolitical uncertainty lingers.
Analysts at JP Morgan believe bullion will reach $3,675 per ounce by the end of 2025, up from $3,418 currently. And analysts tip it to breach $4,000 by the end of next spring.
Buying precious metal stocks like Hochschild offers excellent long term potential too. As a safe-haven asset, they provide investors’ portfolios with added steel to withstand any economic, political and social crises.
I like this FTSE 250 operator because of its strong production profile. Its low-cost Mara Rosa gold mine started up in early 2024, and construction’s set to begin at the Monte Do Carmo project later this year.
Profits could disappoint if safe-haven demand for gold recedes. But I think this is baked into its low forward P/E ratio of 10.2 times.
It also trades on a sub-1 price-to-earnings growth (PEG) ratio, of 0.1, at today’s price of 289p.
