I’m on a quest to find the best cheap UK shares to buy for 2022. Could these bargain stocks make me a load of cash next year?
Insolvency rates begin to boom
I think insolvency practitioner Begbies Traynor Group (LSE: BEG) could see profits soar as the Omicron variant and soaring inflation hit the economy. Insolvency rates have been creeping higher again in the UK as conditions have become tougher for businesses.
New Insolvency Service data last week showed 1,674 corporate insolvencies in November in England and Wales. This was up markedly from 1,405 in October and is the highest level since the pandemic began.
Begbies Traynor’s trading update last week showed revenues up 40% between May and October. This gives it terrific momentum going into the new year. I’d buy the company despite the possibility that fresh furlough support for businesses could be coming down the line, suppressing insolvency rates as they did earlier in the pandemic. Begbies Traynor trades at 135p a share.
A perilous property stock
Town Centre Securities (LSE: TOWN) trades at the same price, more or less, as Begbies Traynor. But it’s a property stock I wouldn’t touch with a bargepole. True, its asset portfolio is highly diversified by sector. However, it still has considerable exposure to retail properties, commercial assets and car parks. These are all sectors which are in colossal danger as Covid-19 infection rates soar and the prospect of fresh lockdown restrictions hovers.
On the plus side, Town Centre Securities also owns a number of residential properties across the country. This gives it an opportunity to make big profits as Britain’s chronic homes shortage pushes property prices steadily higher. Still, I don’t believe this quality offsets the risks I mention above. Rents collection fell to 82% during the six months to October 2020 when the pandemic first began.
Rail fare news last week poses a threat to Town Centre Securities too. Ticket prices are set to leap 3.8% from January, it was announced. This will be the biggest rise since 2013. The high cost of commuting is hastening the adoption of flexible and home-based working, posing a big threat to the future of the office.
Lookers (LSE: LOOK), however, may well have greeted the news with a wide grin. The rising cost of public transport plays into the hands of car retailers like this. I believe ticket prices could keep soaring too as broader inflation rises (travel costs are directly linked to the level of retail price inflation).
I also think Lookers could thrive in the short-term and beyond as growing fears over the environment turbocharge demand for electric vehicles. Latest Society of Motor Manufacturers and Traders data showed sales of battery-powered and hybrid vehicles soar 67.4% year-on-year in November. I think the car retailer (which trades at 63p per share) is a top buy despite the threat that new car shortages could persist.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.