Many UK shares are trading at low prices currently, thanks to all the economic turmoil regarding inflation and interest rates. Yet as a long-term investor, the issues plaguing the stock market today are, in my opinion, short-term problems that many top-tier, high-quality businesses will be able to withstand.
With that in mind, I’ve spotted two stocks that seem like no-brainer buying opportunities, even if I only had as little as £100 to invest. Let’s take a look.
One of the best UK shares to buy now?
XP Power (LSE:XPP) has had a tough run of late, with the share price tumbling by over 60% in the last 12 months.
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As a quick reminder, the business is an electronics components manufacturer that works directly within the engineering, medical, and semiconductor manufacturing industries. So it shouldn’t be surprising that the disruptions to global supply chains have created many headwinds for this business.
Revenue growth has stalled while the order book and lead times continue to build. Sourcing raw materials is proving to be challenging. Even more so, given its manufacturing facilities are located in China, where strict Covid-19 policies are still in effect. To add more fuel to the fire, its competitor Comet Technologies accused XP Power of stealing trade secrets which a US jury awarded $40m in damages against the firm.
With all that in mind, watching these UK shares get sold off isn’t all that shocking. But while these developments are frustrating, the long-term strategy of this business ultimately remains uncompromised. At least, that’s what I think.
Management is still proceeding with its facility expansions to bolster manufacturing capacity once supply chain disruptions have ended. It has £189.2m in liquidity to work with versus only £105.8m in short-term liabilities. And while the $40m legal bill isn’t a pretty sight, it’s ultimately a one-time expense.
In the short-term, further volatility in the XP Power share price may continue. But as a long-term investment, this looks like a no-brainer buy for my portfolio, despite the risks.
Stock Pick #2
Another British business hit hard recently is Howden Joinery (LSE:HWDN). Shares of the UK kitchen materials supplier have tumbled nearly 40% over the last 12 months. And it’s not difficult to understand why.
With consumer spending for discretionary items like home renovation steadily declining and the house building industry beginning to slow, many investors expect Howden Joinery to follow suit.
But looking at the latest results, it seems someone forgot to tell the company. Because revenue continues to grow by double-digits, profit margins are climbing despite inflationary pressures, and the firm is capturing greater market share through expanding its depot network.
Management has admitted that if the housing market or consumer sentiment continues to suffer, maintaining its current momentum could prove challenging. This is obviously a significant risk to consider before making an investment decision.
Yet, with a P/E ratio of just 10 and a tasty 3.4% dividend yield, these UK shares look like a bargain, in my eyes. That’s why I added them to my income portfolio last week.
