I love shopping for cheap stocks. And the recent mini stock market correction has boosted my chances of snapping up some top-quality bargains. I’m aiming to follow billionaire investor Warren Buffett’s advice to “be fearful when others are greedy, and greedy when others are fearful.”
Here are three cheap stocks I’d greedily buy with £3,000 today.
A cheap stock I already own
Warehouse and logistics specialist Clipper Logistics hasn’t been immune to the recent market correction. This is perhaps no surprise as a slower-than-expected economic recovery could damage online retail sales and thus demand for its so-called big box properties. But I think a rock-bottom price-to-earnings growth (PEG) ratio of 1 makes it one of the best value stocks to buy.
In fact, I bulked up my holdings in Clipper Logistics following recent price weakness. This is because I think the cheap stock has a bright future given that e-commerce looks set to keep growing strongly.
A recent poll suggests that 70% of Britons now prefer to shop online versus fewer than half before the pandemic. I expect the number to continue growing too as retailers and manufacturers invest to improve their internet operations.
Another bargain UK share
Springfield Properties is another cheap stock I have my eye on today. Not only does the Scottish housebuilder trade on a low price-to-earnings (P/E) ratio of 10 times for the current fiscal year, its forward dividend yield sits at a chubby 4%.
Recent GDP numbers suggest the British economic recovery’s cooling sharply. This is a worry for Springfield Properties as it could affect home sales in the short-to-medium term. That said, Rightmove’s latest study showing average property prices rise 0.3% in September has soothed my own concerns somewhat. It shows that housing demand continues to outstrip supply in the UK. It’s a phenomenon I expect to live on too as interest rates will likely remain below historical norms.
A FTSE 100 favourite
I’d also buy FTSE 100 defence giant BAE Systems (LSE: BA) at current prices. Today, the company trades on a forward P/E ratio of 12 times, well below the Footsie average of 16.5 times. And the cheap stock boasts a decent 4.4% dividend yield.
I think BAE Systems could be a particularly great buy right now as concerns over the economic recovery grow. This is because government spending on arms tends to remain stable regardless of broader economic conditions.
Moreover, buying defence shares like this is also a good idea in my opinion as tension between China and the West grows in the wake of the US-UK-Australia Aukus pact being signed. In fact, BAE Systems should directly benefit from the accord to help Australia build a fleet of nuclear-powered submarines.
Like any UK share, BAE Systems isn’t without risk. With supply chain problems worsening, costs could rise and severe production problems could happen. Aerospace revenues could also suffer if Covid-19 travel restrictions continue to hammer the airlines. That said, at current prices, I still think this FTSE 100 share is a great buy.
