I’m looking for the best dirt-cheap UK shares to buy for next year. Here are two top-value stocks on my shopping list today.
Making money with the property boom
Trading at Britain’s listed homebuilders has exceeded most expectations so far in 2021. Springfield Properties (LSE: SPR) has proved no exception as demand for new homes soars past supply.
Interest in its affordable homes is rocketing and the Scottish homebuilder reported a record order book of £91.5m as of June. It’s possible that enquiries for cheaper properties will pick up the pace too, as soaring inflation puts household budgets under increasing stress.
I’m confident that home sales should remain strong in 2022 as low Bank of England base rates, Help to Buy support for first-time buyers, and intense competition among lenders benefits buyer affordability.
Though I am mindful that residential property demand might fall sharply following the removal of recent Stamp Duty breaks, pulling sales at the likes of Springfield lower. According to HM Revenue and Customs, home transactions slumped 52% month-on-month in October.
However, City analysts are expecting Springfield Properties to report solid and sustained earnings growth over the short-to-medium term right now. They are predicting bottom-line rises of 4% and 15% for the fiscal years to May 2022 and 2023 respectively. Consequently, the homebuilder trades on a forward price-to-earnings (P/E) ratio of just 10 times.
The good news doesn’t end here either. Current dividend projections leave Springfield sporting yields of 4.1% for this year and 4.6% for fiscal 2023. These figures both beat the 3.5% forward average for UK shares by a very decent margin.
Boxing clever
Springfield Properties isn’t the only mega-cheap UK share I’m thinking of snapping up today. Tritax Eurobox (LSE: EBOX) is another British stock I think offers terrific value from both a growth and income perspective.
A chronic shortage of new property is also affecting the commercial warehouse and logistics market. This means that, like residential developers such as Springfield, property companies like Tritax Eurobox can also ask top dollar for the space they provide.
The growth of e-commerce is turbocharging demand for the buildings that retailers, manufacturers and couriers need to get their product to the consumer. Tritax Eurobox is acquiring assets and land at a swift pace to make the most of this opportunity too. It’s sealed property deals in Sweden, Germany and Italy in the past few months alone.
City analysts reckon Tritax Eurobox’s earnings will rise 29% in the financial year ended September 2022. This leaves the company trading on a forward price-to-earnings growth (PEG) multiple of just 0.8. In addition to this, the property powerhouse packs a meaty 4% dividend yield too.
Mistakes in the acquisition process, like paying for an asset that turns out to be in a bad location, is a risk that Tritax Eurobox investors have to swallow. But I believe this danger is baked into the company’s low valuation right now.