I think these cheap UK shares could be too good to miss! Here’s why I’d invest a lump sum of £7,000 in them next month.
Buying on the dip
I’m considering investing in Serabi Gold (LSE: SRB) following severe gold price weakness that’s pulled its share price lower.
Serabi — which produces the metal from multiple mines in Brazil — plunged to its cheapest since June 2019 in recent sessions. This was prompted by gold values sinking back below $1,900 per ounce.
This shows the risks associated with buying commodities stocks like this. If the price of the underlying raw material falls in value then listed producers can also drop.
It’s quite possible that Serabi’s price could keep falling in respect of this too. Gold has fallen in value because of a strong US dollar and bond yields. A flurry of severe interest rate rises by the Federal Reserve could keep these trends running.
A cheap penny stock
I still think buying Serabi Gold could be a good idea though. At current values of 42.5p per share, the penny stock trades on a forward price-to-earnings (P/E) ratio of just 4.2 times.
I think this is particularly great value, given the range of factors that could send gold values soaring again. The war in Ukraine is creating huge macroeconomic and geopolitical waves that could turbocharge demand for the safe-haven asset again.
There’s also the fact that inflation continues to soar (and often beyond market expectations) despite rate rises by central banks across the globe. Finally, the resurgence of Covid-19 cases in China could push gold through the roof again.
I think there could be plenty of upside for Serabi’s share price right now.
Another cheap UK share on my radar!
Screw, bolt and fasteners manufacturer Trifast (LSE: TRI) faces severe uncertainty as consumer spending sinks. Demand for the products it makes for sectors like consumer electronics could come under significant pressure as a result.
It’s also important to note the difficulties it could face if auto production rates continue to slump. Latest data for the UK, for example, shows manufacturing slump by 100,000 vehicles year-on-year in the first quarter.
A great long-term buy
Still, it’s my opinion that these dangers could be baked into Trifast’s rock-bottom valuation. At 105p per share, this ‘nearly’ penny stock trades on an ultra-low price-to-earnings growth (PEG) ratio of 0.4 times.
As a long-term investor there’s a lot to like about Trifast. I think profits could soar as technologies like electric cars, renewable energy, 5G and electronics rise over the next decade. The business operates all across Europe, the US and Asia too, giving it excellent opportunities to win contracts with major global OEMs.
I think Trifast’s highly cyclical operations leave it well-placed to capitalise on the post-coronavirus economic recovery.