On the lookout for dirt-cheap UK shares? Here are two I’d buy for next month and aim to hold for years to come.
Forecast-beater
I think Ibstock (LSE: IBST) could be a great UK share to buy right now. In fact, I own shares in the brickmaker and believe the next trading statement on 3 November could be another barnstormer.
Ibstock said in August’s most recent update that it expected full-year EBIDTA to be “modestly” above expectations after announcing a 54% rise in revenues between January and June. Sales have been fast approaching pre-pandemic levels of late, it said, thanks to the strength of the UK’s housebuilding sector and robust spending on home improvements.
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I’m convinced demand for Ibstock’s bricks will remain robust too. The colossal level of savings accrued during Covid-19 lockdowns means that DIY-related expenditure should remain favourable. And a mix of historically-low interest rates, an ultra-competitive mortgage market, and ongoing government support for first-time buyers should provide plenty of incentive for the housebuilders to keep building too.
Ibstock could experience a sales dip if broader economic conditions continue to worsen. This could deal a blow to housebuyer confidence and prompt consumers to tighten their purse strings. But to my mind these problems are more than reflected in the brick manufacturer’s ultra-low share price.
City analysts think the company’s earnings will soar 25% in 2022, leaving it trading on a price-to-earnings growth (PEG) ratio of 0.5 for next year.
A reminder that a reading below 1 suggests a UK share could be undervalued. Another forecast-beating update then could well help Ibstock’s share price rise sharply again in November following recent weakness.
Another cheap UK share I’d buy
I’m also thinking of buying Renewi (LSE: RWI) shares for my investment portfolio in November. I believe the recycling giant is a top long-term buy as the escalating climate emergency will steadily boost demand for its services. I think Renewi could be a particularly great stock to own next month too, as its share price also could jump when half-year financials come out on 9 November.
Renewi’s latest trading statement this month revealed that “increased volumes, improved recyclate prices and ongoing cost management” meant that trading continued to be better than expected. It noted that like-for-like sales were up 7% from pre-pandemic levels in the five months to September, and 10% than they were a year earlier.
Renewi has made a habit of beating analyst expectations in recent times. It explains why the company’s share price has soared a whopping 240% over the past 12 months. Yet despite these gains I think it provides exceptional value. City analysts think earnings here will increase 25% in the financial year to March 2022. This results in a forward PEG multiple of just 0.5.
Changing environmental legislation in Renewi’s markets could cause long-term profits to disappoint. But as of today, things are still looking exceptionally promising. Like Ibstock, I’d happily own this dirt-cheap UK share in my portfolio today.
