The UK stock market has rebounded significantly from its lows in March. Don’t stress if you missed the bounce though. There are still plenty of stocks that are trading at attractive valuations.
Here’s a look at three cheap UK stocks I’d buy in August.
A FTSE 100 bargain One UK stock that I think is very cheap right now is insurance specialist Prudential (LSE: LON:PRU). After splitting off its UK operations last year, it’s now focused on Asia and the US. However, it’s shortly about to split off its US business as well, meaning the group will be solely focused on Asia – a region with enormous growth potential.
Prudential shares have taken a hit recently due to the high level of political uncertainty in Asia. This could impact growth in the near term.
However, looking beyond this uncertainty, the company appears well positioned to deliver sustainable long-term growth. According to a recent study by Swiss Re, the mortality protection gap in the Asia Pacific region reached a whopping $83trn in 2019. This suggests there’s plenty of scope for growth in the long run here.
Prudential shares currently trade on a forward-looking P/E ratio of just nine. At that valuation, I see the stock as a ‘buy’.
A small UK stock with big potential Another UK stock that I believe has a lot of potential is Urban Logistics (LSE: SHED). It’s an under-the-radar real estate company that invests in strategically-located logistics warehouses. These warehouses enable retailers to operate their supply chains smoothly and get goods to customers more efficiently.
Urban Logistics has grown at a rapid rate over the last few years. For example, over the last three years, revenue has climbed from £2.3m to £12.6m – an increase of about 450%. Looking ahead, I expect the company to continue growing at a healthy rate as online shopping boosts demand for warehouse space. Just recently, the company said that with many more people working from home and doing their shopping on the internet, the fundamentals of the urban logistics market “remain attractive”.
Urban Logistics shares currently trade on a forward-looking P/E ratio of just 15 using the FY21 consensus earnings forecast. I think that valuation is a steal for this high-growth real estate stock.
This company has strong momentum Finally, I also like the look of Clipper Logistics (LSE: CLG) right now. It’s an innovative logistics company that offers a range of services to retailers, including warehousing, delivery, and returns management services. The company has an amazing list of clients that includes the likes of ASOS (LON:ASOS), John Lewis, L’Oréal, and Boohoo‘s PrettyLittleThing.
This UK stock appears to have plenty of momentum right now. In June, the company said that after an initial period of disruption from Covid-19, it had experienced “strong levels of activity from both new and existing clients”. It also advised that it is confident about its prospects this year and that it expects to benefit from evolving trends in the retail sector as Covid-19 accelerates the shift to online retail.
CLG shares currently trade on a forward-looking P/E ratio of about 17, using the consensus earnings per share forecast for FY21. I think that’s great value. I rate the stock as a ‘buy’.
The post 3 cheap UK stocks I’d buy in August appeared first on The Motley Fool UK.
Edward Sheldon owns shares in ASOS, Prudential, and Clipper Logistics. The Motley Fool UK has recommended ASOS, Clipper Logistics, and Prudential. 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.
Motley Fool UK 2020