Is it too late to find bargain buys after this year’s stock market crash? I don’t think so. I’ve been hunting through the market for potential bargains and have found three shares I think are among the best UK shares to buy now.
Pay attention to CEO share buying
I’ve been a little disappointed by how few company CEOs have been buying shares during the market crash. Although regulatory restrictions mean they’re not always free to deal, I had expected a little more.
One boss who has been buying is Andrew King, chief executive of FTSE 100 packaging group Mondi (LSE: MNDI). Mr King spent £224,400 on Mondi shares last week. This suggests to me that he’s reasonably comfortable with the outlook for the business.
I’m keen too. Mondi has been a good performer in recent years, with an operating margin of about 16% and strong cash generation. In my view, the group’s bias towards consumer products should make it relatively safe in a recession.
Mondi shares currently trade on 14 times 2020 forecast earnings, falling to 12 times earnings in 2021. Although the dividend has been paused, I expect payouts to resume at the end of this year. I think this FTSE stock could be a good share to buy now.
This stock could motor ahead
One business I think could perform well as the economy gets back to normal is used car supermarket Motorpoint Group (LSE: MOTR).
This group specialises in selling cars under three-years-old with less than 25,000 miles on the clock. The group guarantees to offer the best prices on all models and was quick to adopt contactless click and collect services when coronavirus stuck.
I think this business has three key advantages over many car retailers. One is that it has a focused, low-cost business model. Buyers seem to like it — last year, nearly 30% of customers were repeat buyers.
Motorpoint is also able to sell online. Its website allows customers to reserve vehicles and arrange finance and part exchange. Add in home delivery and you don’t need to travel. Â
The final attraction for me is that chief executive Mark Carpenter owns almost 10% of the shares — worth around £22m today. His interests should be well aligned with those of shareholders.
I’ve been following this company since it floated in 2016 and have been increasingly impressed. Although the near-term outlook is uncertain, I think this business should return to growth when market conditions start to normalise. I rate Motorpoint as a share to buy now.
A 7% dividend yield?
My final pick is a dividend stock with a strong record of shareholder payouts. FTSE 250 firm Ferrexpo (LSE: FXPO) is a miner based in Ukraine, producing iron ore pellets for steel mills in Europe and Asia.
Ferrexpo’s operating costs are fairly low — last year it reported an operating profit margin of 33%. Debt levels look pretty safe to me and the group has a track record of strong cash generation, supporting decent dividends.
Although I would argue that this stock carries some political risk, Ferrexpo has traded on the London Stock Exchange since 2007 and is a FTSE 250 member. I’d be comfortable holding the shares.
Indeed, with the stock trading on around six times 2020 forecast earnings and offering a forecast yield of 7%, I rate this as one of the best UK shares to buy now.