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These ‘boring’ cheap shares have rocketed 40% in three weeks. Would I buy today?

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It’s been a cracking November so far for UK shareholders, as share prices have soared on good news. First, Joe Biden won the White House. Second, Pfizer and BioNTech last week announced a Covid-19 vaccine that’s over 90% effective. Third, Moderna topped this, revealing a vaccine this week with over 94.5% efficacy.

Markets loved this positive news, sending the FTSE 100 soaring almost 815 points (14.6%) so far this month. If this keeps up, it could be a new monthly record in the Footsie’s 36-year life. Likewise, stocks have climbed on the other side of the Atlantic, with the S&P 500 hitting an all-time closing high on Monday and up 11.8% in 2020. Yet cheap shares still lurk in the FTSE 100. Here’s one I admire.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

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Cheap shares: L&G is a beautiful British business

One reason why the FTSE 100 has grossly underperformed the S&P 500 in recent years is the different composition of these indexes. The S&P 500 is dominated by mega-cap tech stocks with trillion-dollar valuations and fast-growing earnings. Meanwhile, the Footsie is regarded as its poor cousin, packed with the ‘old world’ cheap shares of banks, oil companies, and miners. Yet the UK really punches above its weight in certain industries, most notably in finance. And that’s where one of my favourite companies comes in: Legal & General (LSE: LGEN). L&G has been a great British success story for 184 years and I see no reason for this run to end.

If you’ve lived in the UK for a reasonable time, you’ll know the Legal & General name. The L&G brand is one of the most widely recognised in UK financial services, partly because it’s been around since 1836. Across almost two centuries, L&G has grown to become a UK market leader in protection, savings, and investments. In fact, L&G looks after over £1.1trn on behalf of more than 10m customers worldwide. In addition, L&G underwrites more individual life assurance products than any other UK company. Yet its stock was repeatedly dumped into the ‘cheap shares’ bargain bucket this year.

Covid-19 crushes L&G stock

During the coronavirus-driven meltdown in the spring, L&G’s stock plunged to crazy lows. Having peaked at 318.4p on 14 February, L&G’s share price collapsed to close at 138p on 23 March. Frankly, that price was insane and these cheap shares were the bargain of a lifetime. Thus, L&G duly bounced back, rising to a post-crash high above 252p on 8 June. Then came L&G’s second collapse, as its share price dived to hit 182.35p on 28 October. The very next day, I argued that this was far too cheap for a firm of L&G’s quality.

Since their October lows, L&G’s cheap shares have rocketed like fireworks on Bonfire Night. As I write, they trade at 254.8p, up almost 72.5p (39.7%). That’s a stunning rise of almost two-fifths in just three weeks. Nevertheless, I believe that L&G shares remain undervalued and are among the cheapest quality shares in the FTSE 100. At their current price, shares in this £11.3bn business trade on a lowly price-to-earnings ratio of 8.7 and an earning yield of 11.5%. What’s more, L&G’s dividend yield is a hefty 7%, more than double the 3.2% the FTSE 100 offers.

In summary, L&G is an excellent, high-quality business whose shares are still too cheap. I’d buy them today, ideally inside an ISA, to enjoy decades of tax-free dividends and future capital gains!

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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Cliffdarcy has no position in any of the shares mentioned. 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.

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