Who doesn’t love cheap shares? I plan to buy them today at a beaten-down rate and hopefully watch their share price grow as I hold them in my portfolio for the years to come.
That sounds ideal. It’s why I’m always on the lookout for the next stock to add to my holdings. To do that, I’m placing my focus on the UK.
Many shares have failed to recover from the volatility we’ve endured in the last few years. In fact, plenty have been struggling since 2016 following the Brexit vote. But not to worry. Instead, I’m dipping my toe into the market and snapping up bargains.
I missed out on these two last month. From their respective January lows, they’re both up over at least 4% as of today (7 February). I won’t be making the same mistake this month.
Blue Eagle Bank
I own Barclays (LSE: BARC) shares already. Yet with a price-to-earnings (P/E) ratio of 4.4, the fifth lowest on the FTSE 100, I plan to buy more.
Its share price dipped to 140.7p in January, meaning today’s price represents a 4.4% jump. I’m confident it’s got plenty of room left for growth.
I’m not expecting that any time soon, however. In the months to come, Barclays will face numerous headwinds. For example, high interest rates pose a threat to the bank as they lead to a greater likelihood of customers defaulting on payments.
But as we move towards the end of 2024 and the years to come, I think Barclays will shine. When interest rates fall, investor sentiment will rise.
A 5.3% dividend yield also makes Barclays a smart addition to my portfolio. With the income I receive, I’ll reinvest it back into buying more shares. At its current price, I think it’s too cheap to pass on.
Drinks behemoth
I’ve also been tracking drinks giant Diageo (LSE: DGE). Its share price has climbed 10.9% from its lowest point last month.
The company owns premium names including Guinness and Captain Morgan. However, its sales have been hit recently, especially in its Latin America and Caribbean (LAC) territory. For the six months to 31 December, sales fell by $310m in the region. This may be a theme that continues in the months to come as consumers look to cut back on spending.
However, I’m not too fussed. Instead, I think the firm’s presence in the LAC territory will pay dividends in the long term as disposable income levels and demand grow. The same can be said for regions such as Asia Pacific, where sales across the same period grew.
With a forward P/E ratio of 18.5, I also think the stock looks cheap. That’s below its historical average of the mid-20s.
Making a move
I’ll have some investible cash this month and I intend to use it to buy these two shares. Right now, I think they’re two of the biggest bargains on the FTSE 100. It’s cheap shares like these that I’m buying now to help build my wealth in the decades ahead.
The post I missed out on these cheap shares last month, but I won’t in February! appeared first on The Motley Fool UK.
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More reading
2 of my favourite, cheap FTSE 100 stocks to buy today!
Diageo share price: are investors factoring in this huge risk?
3 top FTSE 100 stocks that easily pass the ‘snap test’
Rolls-Royce shares: the mistake I’m not making again
If I could only buy 2 FTSE 100 shares in February, it would be these
Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc and Diageo Plc. 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.
