With rising coronavirus cases and fresh restrictions on movement in the UK, stock markets are uncertain. The FTSE 100 index has shown lacklustre performance for weeks now, if not months. Otherwise good stocks are now available at cheap prices. I’d buy these cheap UK shares in November, before the market starts rallying again.
The prices of these three stocks are below £3 each. Compare this to AstraZeneca, a really pricey FTSE 100 stock, whose shares go for 27 times this amount. The allure of holding a cheaper share is understandable. But in itself, a low price is meaningless if the share isn’t performing. One example is the Lloyds Bank share, which has clearly been hit by more than it can deal with. But these cheap shares are different. They are already performing, and I reckon, will continue doing so in the future too.
#1. Cheap UK share ITV gains momentum
The first is the former FTSE 100 and now FTSE 250 broadcaster ITV, which is planning to amp up streaming services in addition to regular TV. Streaming platforms like Netflix and Amazon Prime Video have seen rapid growth in recent years, which bodes well. ITV’s share price has been trending upwards in the past month already.
When I last wrote about the ITV share price, around a year ago, it was at almost double its current level of 74p. At the time it seemed clear that there would be opportunities to buy on dips in the following year. Of course neither I nor anyone else could have anticipated the manner in which they would come about. But they are here. With its earnings ratio of sub-10 times, a history of revenue growth, and sustained earnings, I’d buy the share in my next batch of investments.
#2. DS Smith sees volume growth
I also like the FTSE 100 packaging provider DS Smith. Its share price is currently 295p, still a long way off from its pre-market crash levels. But, it’s recovering. Moreover, the company was upbeat in its latest trading update from September. It reported strong demand and cost reductions.
DS Smith’s revenue was reduced for the first half of the year, but its earnings were strong. Like ITV, its earnings ratio is also quite low, at 7.6 times. I’d buy this stock while its price is still low. There’s plenty of room for it to rise as business gets back on track.
#3. Glencore can gain as metals’ demand rises
Lastly, I like the FTSE 100 multi-commodity miner Glencore. I already own shares in the company, but I think right now may be an opportunity to load up on it. While its earnings have suffered since 2019, it’s third-quarter production update due at the end of October makes me hopeful. If recent updates from Rio Tinto and Anglo American are anything to go by, GLEN should also be upbeat about industrial metals’ demand. Its share price, currently at 168p, could make gains then. I’d consider buying now.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Manika Premsingh owns shares of AstraZeneca and Glencore. The Motley Fool UK owns shares of and has recommended Amazon and Netflix. The Motley Fool UK has recommended DS Smith, ITV, and Lloyds Banking Group and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Discussion about this post