I believe in the general theory that buying cheap can often become expensive. But in the world of investing I think that seeking cheap UK shares to buy can be a good idea. Certainly for my long-term portfolio.
Low-cost UK shares can often experience extreme share price volatility, though this doesn’t put me off. This is because I buy stocks with a view to holding them for the long haul, say a decade or more. History shows us that, over this sort of timescale the cream usually rises to the top. I can be confident that, with the right research, the shares I buy will rise over a period of years. That’s irrespective of what I paid for them in the first place.
Here are three top, cheap UK shares I’d buy to hold all the way to 2030. They all cost less than a £2.40 cup of coffee from your usual high street chain, too.
A cheap UK share for the gaming boom
You might think that the video games industry peaked last year as Covid-19 lockdowns boosted software sales. If that’s the case you’re likely to be proved wrong. Research firm Global Industry Analysts for one expects the global games market to top $293bn by 2027. That represents annualised growth of 9.3% between 2020 and then.
I think buying tinyBuild (LSE: TBLD) shares is a good way for me to play this theme. This UK tech share has published 40 games across PC, consoles, and even mobiles. And it has almost 30 more titles in development with which to exploit the gaming boom. I am aware, though, that games development is an extremely tough business, and problems on this front can play havoc with a company’s profits.
The colossal problems that developer CD Projekt is still having with Cyberpunk 2077 almost a year after launch is evidence of this. I’m not suggesting that tinyBuild is about to suffer similar misfortunes. But its big valuation means that its share price might fall if such issues appear. Today this UK share’s forward P/E ratio sits above 42 times.
A top penny stock
I think grabbing a slice of the residential property rentals market is a great, lower-risk idea. Rents are heading though the roof (no pun intended) because of a severe shortage of available homes. According to Zoopla, tenant costs jumped 4.6% year-on-year in September. This was the biggest jump seen since 2008.
I’d buy The PRS REIT (LSE: PRSR) to ride this theme, a real estate share that falls inside penny stock territory at 97p. This is even though the cost of building its homes could continue spiralling higher if material shortages persist. It will take many years for the drought of rental homes to be cured in Britain, meaning that this share can look forward to strong and sustained profits growth.
Today, PRS REIT trades on a rock-bottom forward P/E ratio of 8.3 times. This, combined with its 5.2% dividend yield makes it excellent value for money in my book.