Investor confidence in British stocks has picked up nicely in recent weeks. The FTSE 100 rose 4% over the course of April whilst the FTSE 250 increased 5% in value. Both indices have risen strongly since the start of 2021, in fact. But there are still many cheap UK shares for long-term investors like me to choose from today.
Here are three I’d happily add to my Stocks and Shares ISA right now.
Game on
Collective investing wisdom suggests that any share trading on a forward price-to-earnings growth (PEG) ratio of below 1 could be undervalued by the market. And this is why I think Games Workshop Group (LSE: GAW) is a British stock that merits serious attention. Today this cheap UK share trades on a multiple of 0.6. I already own the FTSE 250 company in my shares portfolio for a variety of reasons. It sets the standard in the realm of fantasy wargaming and has a huge and fast-growing global fanbase. Its investment in e-commerce is paying off handsomely. And Games Workshop is taking steps to tap the enormous video games market too.
It’s true that the advent of 3D printing has worsened the problem of its intellectual property being ripped off. And the end of the pandemic could see ‘lockdown users’ switching to other sources of entertainment. But I still think the company has a very bright future. City analysts think earnings here will rise 61% and 10% in the fiscal years to May 2021 and 2022 respectively.
Setting the Standard
I think Standard Chartered is another highly-attractive share to buy today. This FTSE 100 bank trades on a forward PEG ratio of just 0.2. I own Prudential in my Stocks and Shares ISA as a rising middle class in Asian markets is supercharging demand for the life insurer’s financial products. For the same reason I’d invest in StanChart too, a company that also has significant exposure to developing regions in Africa and Latin America. City analysts think annual earnings here will rise 62% and 38% in 2021 and 2022 respectively. But I need be aware that the persistence of low central bank interest rates could take a big swipe out of Standard Chartered’s profits looking ahead.
A cheap UK share for the booming games market
I think Sumo Group’s another British stock that could be considered too cheap for me to miss. The number crunchers think annual earnings here will rise 730% in 2021 and 17% in 2022. Consequently the technology company trades on a prospective PEG reading of 0.1. Put simply, this stock provides creative development services to some of the world’s largest games publishers. And its expertise extends from console and PC games right through to interactive mobile phone software. It’s well placed to ride the ongoing explosion in the global video games market. I like this UK share a lot, even though its reliance on four key clients could leave a revenues hole if it loses even one of them.