Could these FTSE 100 and FTSE 250 be too cheap to miss?
A FTSE 100 bargain
Self-storage giant Safestore Holdings is a dirt-cheap UK share high on my shopping list right now. City analysts think annual earnings will rise by around a third in this fiscal year, leaving the FTSE 250 firm trading on a forward price-to-earnings growth (PEG) multiple of just 0.9. It’s true that competition in Safestore’s market is growing sharply as its rivals rapidly expand. However, the rate at which the self-storage industry is growing convinces me that this British stock could still deliver meaty shareholder profits. Mordor Intelligence thinks the global market will be worth $64.7bn by 2026, up from $48bn last year.
Digging for victory
I think that Rio Tinto could be one of the best cheap stocks to buy in August too. Today, the FTSE 100 mining stock trades on a forward price-to-earnings (P/E) ratio of below six times. It’s a reading I don’t think reflects the bright earnings outlook for this major copper miner. I expect demand for the bellwether metal to soar as the economic recovery kicks in and investment in green technology soars. And in the near-term, labour problems at Codelco and BHP’s operations in Chile could give copper prices an extra shot in the arm. I’d buy Rio Tinto at current prices despite the uncertain outlook for iron ore prices, caused by a raft of new capacity entering the market.
I also think the cheap Royal Mail share price makes this FTSE 100 stock worthy of serious attention. Britain’s oldest courier changes hands on a forward PEG ratio of 0.4. A lot of UK share investors don’t fancy the company because it faces immense competition in the parcels market from the likes of DPD and Hermes to name just a couple. But I think Royal Mail still has plenty to offer as it invests to improve its operations on this front, and e-commerce should keep growing strongly. As the Footsie firm commented last week: “We are starting to see evidence that the domestic parcel market is re-basing to a higher level than pre-pandemic.”
Another top FTSE 250 share
Not even the closure of its stores during the pandemic could derail Watches of Switzerland Group over the past year or so. This is remarkable given that buyers of luxury items prefer to browse and see their items in the flesh instead of spending online. Revenues at the business soared 12% in the 12 months to April as its online channel picked up the baton. It’s true that Watches of Switzerland could take a sales hit if severe supply chain issues develop. Still, I reckon there’s a lot to get excited about here, from the resilience of its markets in tough times and its expansion into the US, to the terrific brand power of the pieces it sells like Omega, Rolex and TAG Heuer. Today this FTSE 250 share trades on a forward PEG ratio of just 0.9.
Royston Wild 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.