Noises from the across the pond augur well for the general stock market, I reckon.
Incoming American Treasury Secretary Janet Yellen recently expressed her desire for the US to “act big” in an effort to help its economy recover from the pandemic.
There could be more stimulus ahead
Yellen used to be head of the US Federal Reserve central bank, and some reckon her comments could lead to more stimulus for the US economy.
And it’s usually good for listed stocks when governments try to help their economy like that, at least in the short term. So, we could see some more support for US shares down the road. And a strong US stock market is often good for the UK market. It’s hard to deny the London stock market indices tend to take their cues from the American market.
But other factors are working for shares as well. The UK’s impressive rollout of vaccines suggests the potential for economic recovery, perhaps within months. And some analysts have expressed their view that value stocks could be set to resurge through 2021. Often, such shares can also be categorised as fallen cyclicals, but not always.
My own view is bullish for 2021 and beyond. I’m seeing good value in many defensive-style stocks as well as those closer to the cyclical end of the scale. And with that in mind, I’m searching for decent companies that don’t look too expensive right now. They make my list for further research if they also have the potential for their businesses to recover and grow in the years ahead.
3 cheap UK stocks I’m considering now
FTSE 100 housebuilder Persimmon has a forward-looking dividend yield of around 8.6% for 2021. And with the share price near 2,733p, the stock continues to assign the underlying business a modest-looking valuation. And that’s despite the price rising a fair bit from the lows of last spring. On 13 January, the company reported “robust” trading and the outlook is positive.
Meanwhile, the share price of smoking products manufacturer British American Tobacco has been weak for some time. But the underlying business remains in rude health. With the stock at 2,747p, the forward-looking dividend yield for 2021 is around 8%.
Trading has remained robust through the Covid-19 crisis and the company is working hard to build up sales of its alternative non-combustible products for smokers. The chief executive said in an update in December that he’s “confident” about the future of the company.
And with its share price near 127p, telecoms company Vodafone has a forward-looking dividend yield near 6.4% for the trading year to March 2022. The company delivered a workmanlike half-year results report last November. And the directors declared they are focusing on strategic priorities “at pace” to reshape the business. Chief executive Nick Read said the steady results made him “confident” about the full-year outlook.
I think all three of these businesses have the potential to improve as 2021 unfolds and to thrive in the years after. Meanwhile, there’s a decent dividend to collect in each case.