I understand that the economic outlook is fraught with danger right now. It’s not just Covid-19 that investors in UK shares need to worry about. Rising trade tensions between the US and its major trading partners, Brexit, and political uncertainty in the US also threaten to derail corporate profits in the short to medium term. There are bound to be plenty of business casualties in the post-coronavirus landscape.
I for one haven’t stopped buying UK shares for my ISA, though. Investor appetite for British stocks might be on life support after the stock market crash of early 2020. But market corrections are nothing new and past form shows us that share prices always come roaring back in the subsequent years.
This is why I continue to invest in my Stocks and Shares ISA. By buying today I’m hoping to make a killing later in the decade once UK share prices rebound. I reckon it’s a strategy that any stock investor worth their salt should be embracing too.
2 cheap UK shares that could make you rich!
Let me talk you through three cheap UK shares I think stock pickers should be buying today:
- Despite its ultra-defensive operations Mondi’s shares remain cheaper than at the start of 2020. The packaging giant deals on a forward price-to-earnings (P/E) multiple of around 13 times as a result. And this represents an attractive entry point for stock pickers. This UK share can expect strong demand for its product from multinational consumer goods manufacturers to keep driving profits higher despite the weaker economic landscape. The FTSE 100 firm is a great way to ride the e-commerce explosion, too, an area in which Mondi has invested heavily in recent years.
- Codemasters Group’s also looking scandalously cheap at current prices. Why? A forward price-to-earnings growth (PEG) ratio of 0.2 times fails to reflect the breathtaking rate at which the video games industry is growing. Software sales have boomed in recent months as locked-down citizens have sought to alleviate their boredom. But this is no flash in the pan. A recent report from Global Industry Analysts reckons the global video games market will grow at a compound annual growth rate (or CAGR) of 9.3% through to 2027. And through its massively-popular racing titles like Dirt and F1, Codemasters is in pole position to ride this trend.
- I’m also backing CVS Group to deliver robust profits growth in the years ahead. And I’ve put my money where my mouth is and already bought this UK share – a provider of veterinary services in Britain – for my own Stocks and Shares ISA. Pet ownership is on the rise and so is awareness of animal health by animal owners. This is why research house Global Market Insights reckons the European veterinary healthcare market will grow at a CAGR of 4% through to 2025. CVS shares can be picked up on a forward PEG ratio of 0.6 today. And this makes them too cheap to miss in my book.
Royston Wild owns shares of CVS Group. The Motley Fool UK has no position in any of the shares mentioned. 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.