September sell-off: 2 of the best cheap stocks to buy

September’s proved to be a washout for many UK share prices. The FTSE 100 has fallen 1% in the month to date as concerns over a Chinese property market crash and rising inflation have grown. British stocks could struggle for momentum as 2021 draws to a close, too, should worries […]

September’s proved to be a washout for many UK share prices. The FTSE 100 has fallen 1% in the month to date as concerns over a Chinese property market crash and rising inflation have grown. British stocks could struggle for momentum as 2021 draws to a close, too, should worries over rising Covid-19 rates, the Chinese economy, and earlier-than-expected central bank tightening worsen.

That doesn’t mean I’ll stop shopping for UK shares, however. As someone who invests for the long term, the possibility of temporary share price weakness doesn’t put me off. I think there are too many magnificently cheap stocks out there to miss following the September sell-off.

Here are what I consider to be two of the best cheap stocks to buy for my portfolio right now.

A cheap UK stock for the pets boom

Pet ownership in the UK has gone through the roof due to Covid-19 lockdowns. This means that the amount people are spending on animal care products is also soaring. Blockbuster trading numbers from veterinary surgery CVS Group this week illustrated this perfectly. It’s a phenomenon that should continue powering earnings at Pets at Home Group (LSE: PETS) higher too. Revenues here exploded 30.2% year-on-year in the 16 weeks to 15 July, latest financials showed.

City analysts think earnings here will rise 49% and 10% in the two fiscal years to March 2022 and 2023 respectively. Yet I don’t think this cheap stock’s excellent profits prospects are reflected at current prices. Today Pets at Home trades on a forward price-to-earnings (P/E) ratio of 0.5. A reminder that a reading below 1 suggests that a stock could be undervalued.

Now it’s true that Pets at Home faces significant competition. The food, litter, toys, and broad range of other products it sells can also be picked up from major supermarkets like Tesco as well as US online behemoth Amazon. That being said, I think sunny long-term forecasts for pet care spending still makes this a top stock for me to buy right now. Researchers at Global Market Insights reckon the global pet care market will be worth $350.2bn in 2027 versus an estimated $232.3bn this year.

Logistics leviathan

I also think Clipper Logistics could be a brilliant cheap stock for me to buy as e-commerce levels explode. Retailers across the UK (including Pets at Home) have spent a fortune to bolster their online operations since Covid-19 lockdowns came into effect. And heavy spending here should continue as consumer trends steadily evolve.

Latest Office of National Statistics figures showed that the proportion of retail sales generated online continues to grow. This came in at 27.7% in August versus 19.6% in February 2020 before the pandemic.This bodes well for Clipper Logistics, a cheap stock that provides a variety of e-fulfilment, returns, and logistics services.

Profits at Clipper Logistics could suffer if a slowing UK economy hits consumer spending. But at the moment things look pretty good. City analysts think the support share will see earnings grow 30% and 9% in the next two financial years (to April 2022 and 2023, respectively). This leaves the company trading on an undemanding forward PEG ratio of 1.

The post September sell-off: 2 of the best cheap stocks to buy appeared first on The Motley Fool UK.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

More reading

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild owns shares of CVS Group and Clipper Logistics. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Clipper Logistics and Tesco and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 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.

ASNF

Next Post

5 FTSE 100 stocks to watch in October

Mon Sep 27 , 2021
October will see only a small number of FTSE 100 companies posting updates. But, among the few, we’ll see a good representation of the various Footsie sectors. Here are five I’ll be paying close attention to as possibly buys. We have first-half results coming from Tesco (LSE: TSCO) on 6 […]