Sometimes something looks cheap for a while and then, one day, it is no longer available at that price. I have been eyeing up a couple of shares I think offer me good value. I would consider buying these cheap UK shares for my portfolio at their current prices… while I can.
boohoo
After losing almost three quarters of its value in the past year, the boohoo (LSE: BOO) share price reminds me of the online retailer’s fashion offer. In other words, cheap and cheerful.
I see it as cheap because the company remains firmly in growth mode. It should post double-digit sales growth for last year. Its expanding operations in the huge US market could be another driver for future increases in revenue.
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The earnings picture may be less cheery. The company has warned several times that last year’s profits will be hit by factors including cost inflation, supply chain challenges, and a higher rate of customer returns. I see these as real challenges — but ones the company should be able to get over in the next year or two.
That is why I see the struggling boohoo share price as a buying opportunity for my portfolio.
J D Wetherspoon
I also like the look of J D Wetherspoon (LSE: JDW). The pub operator needs little introduction, as its outlets are a familiar sight in towns and cities up and down the country.
Although Wetherspoon comes in for a lot of criticism for everything from the calibre of its customers to the condition of its carpets, I notice that whenever I go into one it seems to be busy. The chain has hit on a successful combination of cheap prices and central locations.
The pandemic hit the pub trade hard and some of the effects of that are still being felt. For example, many older drinkers feel uncomfortable in crowded pubs and so are going out less. Inflation has pushed up the cost of drink and food. Growing labour costs are another risk to the company’s profits.
All of that helps explain why the Wetherspoon share price is now 46% below where it was a year ago. Given the challenges and another year of losses at the chain last year, why do I see value here?
Basically, Wetherspoon has a proven business model that worked brilliantly for years and I think will do so again. As other pubs go to the wall, its venues can soak up demand. I expect it to move strongly back into the black in the medium term.
My next move on these cheap UK shares
I have already added both these shares to my portfolio this year and I consider their current share prices as ongoing buying opportunities.
I see both companies as quality operators, despite struggling with significant challenges of late. Inflation and supply chain issues may lessen at some point, but they do look set to continue for the next few months at least — and possibly much longer.
So although I am optimistic about the long-term prospects for these two shares, I would not be surprised if there are bumps along the way. But as a buy-and-hold investor, I accept that.
