Looking for the best bargain shares to buy? I think these FTSE 100 and real estate shares are worth a close look right now.
Barratt Redrow
Sentiment towards UK housebuilders like Barratt Redrow (LSE:BTRW) has soured since the end of October. Investors are worried about stamp duty changes in the Budget, which could dampen home purchases from first-time buyers and those seeking second homes.
The market’s also been spooked by Donald Trump’s victory in the US Presidential election. A slew of potential trade tariffs could push up inflation, causing interest rates (and mortgage costs along with them) to rise.
To cap things off, Thursday’s trading update from Persimmon has ignited fears over builders’ margins. In it, the company said it is seeing “some signs of build cost inflation beginning to emerge“, adding that “new building regulations and the employer national insurance increases announced in the recent Budget” are impacting costs.
Yet I believe these troubles are reflected in Barratt’s sharp price drop, which — at 434p per share –recently touched one-year lows. It’s now a top dip buy to consider in my book.
Firstly, the builder’s shares look dirt cheap relative to expected earnings. Its forward price-to-earnings growth (PEG) ratio is just 0.2, reflecting City forecasts of a 107% profits bounce.
Any reading below one indicates that a share is undervalued.
It’s also worth remembering that the mood music around the UK housing sector remains broadly positive. Barratt’s latest update showed a private reservation rate of 0.67 from 22 August to 13 October, up more than a third from 0.49 a year earlier.
Since then, house price data from Rightmove has shown a market that’s clicking through the gears. Average house prices rose higher than forecast in October, up 4.6% year on year to reach record peaks of £293,999.
With interest rates tipped to continue dropping in 2025, conditions for the likes of Barratt should continue improving sharply.
I already own Barratt shares. And following its recent dip, I’m thinking of adding more.
Schroder European Real Estate Investment Trust
The Schroder European Real Estate Investment Trust (LSE:SERE) is another top UK share that looks incredibly cheap to me.
At 69.2p per share, the business trades at a whopping 32.3% discount to its estimated net asset value (NAV) per share. This leaves scope for significant share price gains as eurozone interest rates fall, boosting asset values alongside economic activity in the region.
The trust owns retail, office, and industrial properties across Germany, France, and the Netherlands. And it focuses on attractive cities with strong economies and infrastructure (like Berlin and Paris) that can deliver long-term returns.
As a real estate investment trust (REIT), it must pay at least 90% of annual rental profits out by way of dividends. This could make it a great option for investors seeking large and reliable dividend income.
Indeed, the dividend yield here sits at a giant 8.4%.
The trust’s high exposure to cyclical sectors leaves it vulnerable to economic downturns. But on balance, I think it’s an attractive stock to consider, and especially given its current discount.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
The post These FTSE 100 and real estate shares are on sale! Time to consider buying? appeared first on The Motley Fool UK.
But here’s another bargain investment that looks absurdly dirt-cheap:
Like buying £1 for 31p
This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
More reading
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2 high-yield dividend stocks and an ETF I’d buy to target a HUGE passive income
Inflation falls to 1.7%! Here are the UK shares that I think will benefit the most
Royston Wild has positions in Barratt Redrow and Persimmon Plc. The Motley Fool UK has recommended Barratt Redrow. 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.
