The Motley Fool

Cheap UK shares for 2021? Here are two I’d buy today

Image source: Getty Images

Many UK shares rallied strongly after November’s vaccine news, but I don’t think the stock market recovery is over yet. I think there are still some good, cheap companies out there. Today, I want to look at two names on my buy list at the moment.

How I’d play the housing market

Housebuilder Barratt Developments (LSE: BDEV) is one of my favourite firms in this sector. I rate the management highly and admire the company’s 11-year record of achieving a five-star HBF customer satisfaction rating. In my view, it pays to invest in companies which sell products popular with customers.

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…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Barratt says sales rose by 12% during the second half of 2020. In total, 9,077 homes were sold with an average selling price of £283,000.

This surge in demand is partly due to lockdown restrictions in spring last year which prevented moving. But government policy is probably a factor too. The popular Help to Buy scheme is due to be restricted to first-time buyers from April. The current stamp duty holiday is also due to end on 31 March.

These one-off factors may affect future demand and house prices, but they’re no secret. I believe these risks are already priced into this popular UK share. What’s more, I think there’s a good chance the chancellor may extend one or both of these schemes, given the UK may be in lockdown until March.

Barratt shares currently trade on 13 times 2021 forecast earnings, with an expected yield of 3%. I don’t know what the future holds for the UK housing market, but I do trust Barratt’s experienced management to navigate the situation as well as possible. I think this company should do well when life finally returns to normal.

A UK share in need of normality

Barratt was able to continue fairly normally for much of last year. Pub operators such as Marston’s (LSE: MARS) haven’t. The company’s pubs are all currently closed, as they have been for much of the last nine months.

This is causing problems for Marston’s but, unlike some rivals, I think this group looks financially secure and well-positioned for a recovery.

In October, Marston’s sold its brewing business into a joint venture with Carlsberg for £233m, allowing the group to repay some of its debt. A further payment of £20m is due in October this year.

It’s also expanded its pub estate during the crisis, by taking on the management of 156 pubs from Welsh brewer Brains.

As things stand, the business is obviously losing money. But the latest numbers from the company suggest to me it could survive lockdown until early summer without needing extra cash. I’d hope that we’ll be out of lockdown sooner than that.

When life does go back to normal, I believe pubs should recover fairly quickly. I think that operators whose finances are not too strained could be good investments. Marston’s looks good value to me for a recovery trade — the firm’s shares trade at just 6.5 times 2019 earnings.

Any return to normal would be likely to lift the stock, in my view. I’d buy this UK share for a recovery portfolio.

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.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.