Last month, the FTSE 100 index hit an all-time high of 8,047.06 points. As I write, it stands at 7,564.68, down over 480 points (-6%) from its peak. However, many UK stocks have fallen much harder than this recently. Here are five cheap shares that I already own, but would gladly buy at today’s newly discounted prices.
Five sliding FTSE 350 shares
The cause of this latest market meltdown originated in California and New York, where two mid-sized US banks failed. Both banks specialised in clients in the US tech sector — and both failed due to poor risk management.
Just as in the old saying, “When New York sneezes, London catches a cold”, this American contagion rapidly spread to hit UK stocks hard. For example, each of these five FTSE 350 stocks has taken a beating in the past few days:
| Company | Market value | Share price | One-year change | Five-year change |
| Aviva | £12.0bn | 428.5p | -22.0% | -37.1% |
| Barclays | £23.4bn | 148.18p | -12.8% | -27.0% |
| Direct Line | £2.1bn | 157.3p | -42.6% | -58.8% |
| Legal & General | £14.4bn | 242.89p | -8.3% | -6.4% |
| Lloyds | £31.7bn | 47.7p | 0.0% | -28.3% |
Worst hit of these five shaken stocks is Direct Line Insurance Group, which had the misfortune to release weak full-year results into Monday’s plunging market. Even worse, its shares have lost more than two-fifths of their value over the last 12 months. Ouch.
Note that all five shares inhabit the financial sector: Aviva, Direct Line and Legal & General Group are all insurers and asset managers, while Barclays and Lloyds Banking Group are leading UK banks. Each has been knocked due to the fear, uncertainty and doubt rocking the US banking sector.
I see these as very cheap shares today
My wife bought all five of these shares for our family portfolio in June or July of last year. At the time, I viewed each as a bargain buy — but several of these stocks are now even more undervalued. Here’s how their value fundamentals stack up today:
| Company | P/E ratio | Earnings yield | Dividend yield | Dividend cover |
| Aviva* | – | – | 7.2% | – |
| Barclays | 5.0 | 20.1% | 4.9% | 4.1 |
| Direct Line* | – | – | – | – |
| Legal & General | 6.7 | 15.0% | 8.0% | 1.9 |
| Lloyds | 6.6 | 15.1% | 5.0% | 3.0 |
As a veteran value/dividend/income investor, I’m drawn to shares trading on lowly price-to-earnings ratios and, therefore, high earnings yields. Barclays, L&G and Lloyds all hit the spot here, with Barclays looking like an outstanding bargain.
Likewise, I also like owning cheap shares that pay me decent cash dividends while I wait for share prices to rise. Four of these five discounted stocks meet this requirement, while Direct Line has suspended its dividend until its earnings rebound later this year.
What’s more, dividend cover from these shares ranges from 1.9 times at L&G to a whopping 4.1 times at Barclays. Then again, these are all trailing (historic) figures — and analysts expect financial firms’ earnings to decline in 2023.
In summary, I would gladly buy all five of these cheap shares today, but I won’t. That’s because I already own them, plus I’m waiting for the new tax year to start on 6 April before investing more cash!
The post These 5 cheap shares are all on sale today! appeared first on The Motley Fool UK.
Don’t miss this top growth pick for the ‘cost of living crisis’
While the media raves about Google and Amazon, this lesser-known stock has quietly grown 880% – with a:
- Greater than 20X increase in margins
- Nearly 60% compounded revenue growth over 5 years – more than Apple, Amazon and Google!
- A 3,000% earnings explosion
Of course, past performance is no guarantee of future results. However, we think it’s stronger now than ever before. Amazingly, you may never have heard of this company.
Yet there’s a 1-in-3 chance you’ve used one of its 250 brands. Many are household names with millions of monthly website visitors, and that often help consumers compare items, shop around and save.
Now, as the ‘cost of living crisis’ bites, we believe its influence could soar. And that might bring imminent new gains to investors who’re in position today. So please, don’t leave without your FREE report, ‘One Top Growth Stock from The Motley Fool’.
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()
More reading
- 5 FTSE 100 income stocks paying bumper dividends
- 8.8% dividend yield! Is the HSBC share price the FTSE 100âs greatest bargain?
- 2 FTSE 100 stocks I’d buy before Mr Market changes his mind!
- Up 5% in March: why National Grid shares are worth considering now
- Forget Premium Bonds! I’d aim for a million by investing £50k in UK shares
Cliff DâArcy has an economic interest in all five shares mentioned above. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group 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.
