I’m searching for the best cheap UK stocks to buy for my shares portfolio in April. Here are two low-cost companies trading just above penny stock territory that I’d invest in next month.
Answering the distress call
I think that FRP Advisory Group (LSE: FRP) could be a great stock to own as the UK economy rapidly cools down.
The number of insolvencies in Britain is rising sharply following the withdrawal of government support during Covid-19. Latest government figures show that corporate insolvency levels more than doubled year on year in February to 1,515.
The impact of fading consumer confidence and rising costs mean that the number of firms experiencing severe distress unfortunately looks set to keep rising. So I’m expecting demand for FSR’s services to gain momentum.
This ‘nearly’ penny stock (which trades around 122p) provides a range of restructuring and other services for companies in distress. And latest financials showed organic revenues leapt 8% during the six months to October.
City analysts think FRP Advisory’s earnings will rise 20% year on year in the upcoming financial year ended April 2023. Though be aware that at current prices the business trades on a chunky forward price-to-earnings (P/E) ratio of 20.3 times.
Such a valuation could prompt a sharp share price correction if profits projections begin to look in danger. This could happen, for example, if it were to lose out on business to competitors, or if economic conditions end up better than expected.
Good reasons to box clever
I believe Tritax Eurobox (LSE: EBOX) could be a great stock to own as e-commerce grows. And I think it’s particularly attractive following share price falls in 2022. Today the company trades at 105p per share.
A forward P/E ratio of times around the mid-20s sits more or less around its historical average. What I really like, however, is that today Tritax Eurobox’s dividend yield sits at an impressive 4.4%. This sits above normal levels and comfortably beats the FTSE 250 average of 2.4%.
The steady rise of online shopping means demand for the sort of warehouse and logistics spaces Tritax Eurobox supplies is likely to continue booming.
The rents that this nearly penny stock charges are already rising strongly. And I expect supply to continue to lag demand for a long time, meaning rental income should continue booming. This reflects the chronic underinvestment in this particular property class in recent years.
I already own Tritax Big Box REIT and Clipper Logistics shares to exploit this theme. However these two businesses operate solely in the UK. The beauty of investing in Tritax Eurobox is that it operates across various European countries.
This gives the property stock added strength through geographic diversification as well as exposure to fast-growing emerging markets in the east of the continent.
One drawback for owning Tritax Eurobox is that profits could disappoint if it makes poor acquisition choices. But on balance I think the potential benefits of owning this UK share outweigh the risks.