Market volatility has cranked up several gears following the tragic conflict enveloping Ukraine. For UK share investors there could be more choppiness to come too, as inflation soars and central banks aggressively raise interest rates in response.
Should I still be looking for cheap stocks to buy for my portfolio?
As a long-term investor, the prospect of further market volatility hasn’t derailed my investment plans. History shows us that stock markets are, over a period of a decade or more, a great way to build wealth. The average yearly return for long-term share investors clocks in at around 8%.
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This is why I’m continuing to search for cheap stocks to buy today. I may even be able to pick up a bargain or two following recent market volatility. Here are two ultra-cheap stocks I’m considering snapping up.
Riding the green revolution
Sales of bicycles soared during Covid-19 lockdowns and Halfords Group (LSE: HFD) has been a huge beneficiary. Demand for its two-wheeled products has since cooled however, and latest financials showed cycling revenues down 23.8% year-on-year in the three months to December. Much further pressure could be coming too as consumer confidence comes under pressure.
Those sales numbers are no surprise though, given the electrifying demand for its product in the prior year. In fact, as a long-term investor, Halfords still has plenty of appeal for me. I expect sales of its bikes to steadily rise this decade as people switch away from their cars and head for the great outdoors.
The desire to lead healthier lifestyles continues to rise across society in this post-pandemic age. People are also looking for more environmentally-friendly ways to travel as the climate crisis worsens. What’s more, spending on cycling infrastructure is steadily increasing too in a bid to encourage people to take up cycling.
A cheap stock to buy today
Just yesterday, Brompton announced ambitious expansion plans that illustrate the robust outlook for bike sales over the next decade, at least. The folding bike specialist said its new factory it intends to open in 2027 will manufacture 200,000 cycles each year. It currently sells around 70,000 of its products per annum.
Now Halfords is expected to see some turbulence in the near term as supply chain issues bite and sales slow from recent levels. City analysts think earnings at the firm will slip 20% in this outgoing financial year ending March 2022. But they think profits will stabilise in fiscal 2023 before rising 8% the following year.
Based on these predictions, I think Halfords is a terrific cheap stock to buy. At current prices of 277p per share, the retailer trades on a forward price-to-earnings (P/E) ratio of 8 times. I think this rating, below the bargain benchmark of 10 times, fails to reflect Halfords’ solid long-term profits outlook. I’d buy it today with the aim of holding it for years to come.
