I’m looking for the best cheap UK shares to buy for 2022. Here are two brilliant bargains on my shopping list.
On the crest of a wave
I consider Crest Nicholson’s (LSE: CRST) a sub-£5 UK share too cheap for me to miss. At 342p per share, the housebuilder trades on a forward P/E ratio of just 9 times. This is too cheap given the bright outlook for the housing market in 2022, in my opinion. Indeed, City analysts think Crest Nicholson’s earnings will rise an extra 22% this financial year (to October 2022).
What’s more, today, the business also boasts a meaty 4.5% dividend yield for this fiscal period. This is more than double the current FTSE 250 average yield of 2%.
I already own shares in a couple of British housebuilders. So I was lifted by fresh research by property listings powerhouse Rightmove released this week. It said that it expects the market to revert to “more ‘normal’ conditions” in 2022 following the “frenetic” last 18 months.
Still, it added that average home prices should rise 5% year-on-year next year “as strong buyer demand and a historically low level of available property continue to push up prices.”
A top long-term buy
Reflecting these bright conditions, Crest Nicholson’s November trading statement revealed that sales rates have remained “robust” across all its regions. The builder is seeking to take advantage of the favourable trading environment by setting up three new regional divisions by 2026 too. It hopes this will set it on course to build 4,200 new homes a year by then, almost double what it is currently producing.
But this cheap UK share isn’t without risk. Costs are increasing as raw material and labour prices rocket through the roof. This looks set to continue hitting profits in 2022 too. It’s also possible that Bank of England interest rate rises could take a big bite out of homebuyer demand. That said, it’s my opinion that the rewards on offer from Crest Nicholson far outweigh the dangers.
Another cheap UK share I’d buy
Of course, I don’t have to buy the builders to capitalise on the house price boom. I can buy the companies that allow the likes of Crest Nicholson to sell their products. Firms like Nexus Infrastructure (LSE: NEX), for example, which trades at 228p per share. This particular business creates and installs the systems that get utilities connected up on new housing developments.
This isn’t the only reason I’d buy Nexus though. The company also installs electric vehicle (EV) charging points in homes and on the street. This should allow it to benefit from the huge sums being allocated to building EV infrastructure in Britain. Last month, the government announced legislation making it a legal obligation to install charging points in all new homes from next year.
Demand for Nexus’s services could shrink if Covid-19 cases keep rising and the construction industry shuts down again. But, as things stand, I think this cheap UK share is worth serious attention.