Okay, the economic outlook remains packed with danger right now. Covid-19, Brexit, and trade wars all mean UK share investors like me need to be extremely careful before buying stocks.
However, I don’t plan to stop building my own shares portfolio in 2021. There are still plenty of stocks out there that could create heroic shareholder returns. Here are four cheap UK shares I’m considering buying in my Stocks and Shares ISA right now.
#1: The housebuilding hero
I’m confident Taylor Wimpey will deliver big profits growth over the next decade. A chronic homes crunch in Britain means its newbuilds will keep selling like hotcakes. I think the Bank of England will keep interest rates locked at rock-bottom levels in a boost to buyer demand too.
That said, the termination of the stamp duty holiday next month might slow the housebuilder’s profits growth later in 2021. Today, this FTSE 100 share trades on a low forward price-to-earnings (P/E) ratio of 12 times. It carries a meaty 5% dividend yield too. This beats the broader 3.5% average for UK shares by quite a margin.
#2: The gold digger
Commodities play Anglo Asian Mining also offers plenty of bang for an investor’s buck. It offers a 4% dividend yield for 2021. And a forward P/E ratio of 7 times is hard to ignore, in my opinion. This sits below the widely-regarded bargain territory of 10 times and below.
There’s always political, environmental and operational risks facing UK mining shares like these. But, on the plus side, Anglo Asian can expect asking prices for its gold and silver to remain strong amid ultra-low global interest rates and ongoing central bank quantitative easing.
#3: The UK share for fast food lovers
Food-to-go manufacturer Bakkavor Group endured a torrid 2020 as Covid-19 lockdowns smashed demand for its products. It’s possible conditions could remain tough too if new coronavirus variants illustrate effective immunity to vaccines and people remain in their homes. But I still think the company merits serious attention at current prices.
It trades on a modest P/E ratio of 10 times for 2021 and boasts a 5% dividend yield. Food-to-go was one of the fastest-growing segments of the sector’s broader market before Covid-19. This trend will likely resume when the world begins to open up again.
#4: The medical marvel
I think GlaxoSmithKline is a brilliant UK share to buy for big dividends. The medicine-maker’s ultra-defensive operations provide it with excellent earnings visibility. And this in turn gives it the confidence to keep paying big dividends to its shareholders. Also, the FTSE 100 firm’s yield sits at a fat 6.3% for 2021. It trades on a forward P/E ratio of around 13 times too.
A word of warning though. Pharmaceutical companies always face the risk of failures at the R&D stage. This can cost a fortune in lost revenues and extra expense.
Royston Wild owns shares in Taylor Wimpey. The Motley Fool UK has recommended GlaxoSmithKline. 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.