I’m searching for the best cheap UK shares to buy in 2022. Here are three ‘nearly’ penny stocks I think could be top buys for the new year. Each costs less that 150p apiece.
A favourite foodie
Bakkavor Group’s (LSE: BAKK) a UK share that’s not for the fainthearted. The business is a giant in the food-to-go sector and, as a consequence, its revenues have been hammered by Covid-19 lockdowns. Similar restrictions have been avoided more recently but the threat of new ones remain as the pandemic rolls on.
I think this danger might be baked into Bakkavor’s share price though. At 133p, the foodie trades on a forward price-to-earnings growth (PEG) ratio of 0.8, below the benchmark of 1 that suggests a stock is undervalued.
I’d buy Bakkavor as City analysts think the food-to-go segment is set for explosive growth. Lumina Intelligence, for one, reckons the industry will be worth £22.6bn by 2024, up from £15.3bn today. One final reason why I’d load up on Bakkavor shares is that, at current prices, it sports a monster 5.4% dividend yield for 2022.
A top renewable energy stock
I believe buying renewable energy stocks could be a good idea for me as demand for ‘clean’ energy soars. This is where Foresight Solar Fund Limited comes in, a near-penny stock which holds stakes in solar farms in the UK, Spain and Australia. I also like this particular operator because it made its maiden foray into the potentially-explosive battery storage market earlier in 2021.
The unpredictable nature of solar power generation means that energy storage is critical. And with this type of renewable energy becoming increasingly popular, the market for batteries is tipped to grow rapidly. I’d buy Foresight even though operating solar farms is expensive and unexpected costs can hit profits hard. The stock trades at 101p today.
Another ‘nearly’ penny stock I’d buy
I’d also buy Scottish housebuilder Springfield Properties (LSE: SPR) because of a solid outlook for the UK’s homes market. Stamp Duty reductions earlier in 2021 helped inflate property prices, but the recent withdrawal is expected to reduce the rate of growth in 2022. But next year, estate agency Savills still expects average home values to rise by a healthy 3-5%.
Happily for Springfield Properties, it seems like (at least in my opinion) home prices should keep climbing too. Low interest rates and Help to Buy support for first-time buyers means demand should keep outstripping housing supply. I’d buy this cheap UK share even though inflated building product costs look set to remain in place next year.
Analysts at ING Bank recently said it won’t be until “at least until the summer of 2022” before prices of some construction materials, such as concrete, bricks and cement, will drop.
Besides, I think a forward PEG ratio — allied with a 4.4% dividend yield — for the financial year to May 2022 is too good to pass up on. Today, Springfield Properties trades at 147p per share.