Investors aren’t quite in panic mode right now. But stock markets across the globe are heading sharply lower again as fears of inflation grow. UK shares haven’t been saved from the washout and, as I type, every company on the FTSE 100 (except BT Group) is down in Tuesday trading.
My own UK shares portfolio has taken a stonking hit amid the stampede for the exits. But I’m not throwing my hands up in horror. I look for the best stocks to buy, according to what sort of return I can reasonably expect over the long term. And over a number of years (I buy shares I’d be comfortable to hold for a decade), I’m confident the companies I’ve bought for my Stocks and Shares ISA will make me a big fat profit.
This is why I use stock market dips like this as a chance to look for bargains. Here are what I think are three of the best UK stocks to buy after Tuesday’s dips.
#1: Safe as houses?
Barratt Developments is a UK share I already own in my ISA. And latest financials from the FTSE 100 housebuilder have affirmed my belief that the blue-chip is a top British stock. Soaring new homes demand in Britain means reservation rates and prices on Barratt’s properties keep rising strongly. In fact the company now expects full-year completions to beat its earlier expectations. It’s true that rising construction costs pose a not-insignificant threat to the builder’s bottom line. But I think it’s too cheap to miss following today’s stock market crash. Barratt trades on a forward price-to-earnings growth (PEG) ratio of 0.2.
#2: Georgia on my mind
A PEG reading below 1 suggests that a UK share has been undervalued by the market. It’s the same reason why I think TBC Bank could also be one of the best value stocks to buy right now. The FTSE 250 bank trades on a rock-bottom PEG multiple of 0.1 for 2021. It carries a near-5% dividend yield to boot. It’s possible that the profitability of TBC could suffer in the short-to-medium term if central banks keep interest rates locked around current lows. But I’m backing the bank to deliver terrific shareholder returns in the years ahead as economic activity in its Georgian marketplace balloons.
#3: A top UK tech share
I believe Kape Technologies could be one of the best tech stocks to buy for this new decade. Why? It’s an expert in the field of fighting cybercrime, a problem that is rocketing in the wake of the Covid-19 crisis. According to BAE Systems, a staggering 74% of banks and insurers have experienced a rise in cybercrime since the pandemic began. It’s an issue that’s not exclusive to financial services firms either, giving Kape excellent revenues opportunities. Now this UK share’s small size may see it struggle against some of the biggest operators like Microsoft and McAfee. But a tiny forward PEG ratio of 0.3 still makes it an attractive UK share, in my opinion.
Royston Wild owns shares in Barratt Developments. The Motley Fool owns shares of and recommends Amazon and Microsoft. 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.