UK share markets endured a sharp sell-off in mid-September. And a lot of top-quality stocks have failed to bounce back, leaving them trading at rock-bottom prices. Here are what I think could be four of the best cheap shares to buy right now.
A top bargain
I already own Ibstock shares in my Stocks and Shares ISA. And following its sharp correction last month I’m thinking of upping my stake in the brick manufacturer. Today the business trades on a forward price-to-earnings-growth (PEG) ratio of just 0.1. Any reading below 1 suggests a stock could be undervalued and this is well below 1.
I think Ibstock is one of the best stocks to buy to capitalise on Britain’s housebuilding needs. The country’s major builders are all upping production to meet soaring homes demand. And I expect construction levels to remain strong as low interest rates and government help for first-time buyers persists. I’d buy more of Ibstock, despite the threat posed by a slowing UK economy.
Market leader
I think Coats Group also looks too cheap for me to miss. Like Ibstock, September’s share price fall leaves the zip-maker and threads manufacturer also trading on a PEG ratio of just 0.1 for 2021. I think this makes it a steal given the pace at which global demand for fast fashion is expected to grow as wealth levels in emerging markets explode.
Of course Coats Group could be a casualty of rising consumer concerns over sustainability. Reduced clothing sales would naturally hit sales volumes of its products. But as a market leader I think the business would still have the clout to thrive and deliver terrific shareholder returns. I’d buy.
One of the best media shares to buy
News publisher Reach has sunk in value due to fears of a fresh slump in ad spending as the economic recovery stalls. Strong advertising revenues are the lifeblood of media companies like this. But I think the national and regional publisher remains attractive for me from a risk/reward perspective. It trades on a forward price-to-earnings (P/E) ratio of just 9 times.
I think the huge investment Reach has made in its digital operations will pay off handsomely in the years ahead. Latest financials showed digital like-for-like revenues balloon 42.7% between January and June. I also like the evergreen popularity of its outlets like like the Mirror, the Express and Manchester Evening News, news brands that I feel make Reach the best commercial publisher by audience size.
7.8% dividend yields
Gold prices have come off the boil amid increasing bond yields and a resurgent US dollar. As a result, many mining companies like Polymetal International have sunk in value. But I don’t think gold’s race is run. In fact I think it could make a charge back towards last year’s record highs as inflation booms and economic growth slows to a crawl.
I still think precious metals producers Polymetal could be among the best mining stocks to buy today, then. And this particular one trades on a forward P/E ratio of 8 times. It carries a delicious 7.8% dividend yield as well. I’d happily spend £500 on it today.