Are you seeking cheap stocks to buy in the new year? Well you’re in luck. London stock markets might be off the lows they hit during the early 2020 stock market crash. But there are plenty of top-quality UK shares that continue to trade much too cheaply.
Here are a few I’d buy today in my Stocks and Shares ISA to hold all the way to 2030.
The digital revolution is going from strength to strength following the Covid-19 outbreak. In particular, growth in e-commerce, a rise in online fraud, and the growth of flexible working have all received a lift in 2020. These three items all provide excellent investing opportunities for UK share investors.
I would buy into Unisys Corp to ride the revolution. The US company is a global titan in the field of IT services and its wingspan straddles a broad range of industries. I think it’s a brilliant buy for value investors. City analysts reckon annual earnings here will rocket 84% in 2021. This leaves it trading on a cheap forward price-to-earnings (P/E) ratio of 13 times.
Doubling up with UK shares
But I’m mainly focused on UK shares and these two offer particularly good value for investors like me, I feel. They trade on mega-low earnings multiples and they carry enormous dividend yields.
I consider Contour Global to be the perfect pick for these uncertain times. Not only has it experienced no adverse impact at all in 2020 following the Covid-19 crisis. But the essential nature of its services (it builds and operates power stations) means that it can also be expected to weather a long and severe downturn in the global economy.
I don’t think these qualities are reflected at current prices. A price-to-earnings growth (PEG) reading of 1.2 for 2021 suggests top value. But this is not the main reason this UK share provides spectacular bang for my buck. It also sports a monster 6.5% dividend yield. I’d buy Contour Global today and hold it for years as energy demand soars across the globe.
London has been a magnet for people for millennia. And its allure is as strong today as ever, making The Berkeley Group (LSE: BKG) a great UK share for the long term. This London-focused housebuilder has a strong pipeline of new homes through construction activity and recent acquisitions.
As the boffins at Hargreaves Lansdown note, the business enjoys high margins thanks to its expertise in “technically challenging” sites. The premium London market helps margins too, of course. A slow economic recovery and/or extended Covid-19 restrictions could damage profits growth in the near term. But in my opinion, an environment of low interest rates and huge government support should put a floor under homebuyer demand.
Today The Berkeley Group trades on a reasonable forward P/E ratio of 13 times. It carries a jumbo 4.5% dividend yield too. I own shares in Taylor Wimpey and Barratt Developments to get rich with housing stocks. And I think this FTSE 100-quoted UK share is another way to make big returns over the next decade.
Royston Wild owns shares in Barratt Developments and Taylor Wimpey. The Motley Fool UK has recommended Hargreaves Lansdown. 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.