I reckon there are a number of quality cheap shares up for grabs to boost my wealth.
The struggles of UK stocks started due to the first rumblings of Brexit, around 2016. Foreign investment cooled due to fears of the economic direction of the country. Then we stumbled into the pandemic. Next, just as the economy began to show signs of recovery, turbulence and geopolitical issues hit together. Now, here we are!
Some things to bear in mind
Not all FTSE stocks have struggled in recent years. Some have been able to navigate the issues successfully. This could be due to headwinds favouring their business model, or defensive abilities.
A couple of examples of this are AstraZeneca during the pandemic, which did well due to the Covid-19 vaccine. A more recent example would be energy firms like Centrica, who reported surging profits due to rising energy prices.
Other stocks still look attractive but their share prices haven’t taken off. So they’re not struggling from a performance and returns point of view, but their valuations remain enticing. I could look to buy cheaper shares now, with a view to them rising in the future as well as capitalising on current returns.
Finally, a word of caution is that just because something looks cheap, does not mean it represents value for money. A share trading for £10 may actually be better value for money compared to one trading for £1.
Valuing shares and a couple of options
Two key valuation methods for me are the price-to-earnings ratio and price-to-earnings growth ratio. I’d like to understand the position of a sole stock, as well as its industry’s average ratios and those of its competitors. This could give me a flavour of whether the shares are cheap or only appear cheap.
A few of the cheap shares on my radar to help boost my wealth are Lloyds Banking Group, Unilever, and Glencore.
All three of these stocks look cheap to me, with plenty of upside for the future. These aspects are market share, demand for products and services, as well as passive income through dividends.
The table below shows each stock’s P/E ratio and dividend yield.
| Company | P/E ratio | Dividend yield |
| Lloyds Banking Group | 4 | 5% |
| Unilever | 16 | 3% |
| Glencore | 6 | 10% |
Lloyds could be set to soar in the coming years. It is a vital cog in the UK banking system and the largest mortgage provider in the UK.
Unilever is one of the largest consumer goods firms in the world. Its valuation may not appear cheap, but looks enticing compared to historic valuations and I reckon volatility has caused this.
Glencore’s mining profile and operations help it provide investors with passive income now. Looking forward, as the world grows and demand for commodities increases, it could find itself climbing sooner rather than later.
If I really do want to boost my wealth, I’d reinvest my dividends to make more money. However, it’s worth noting that dividends are never guaranteed.
Naturally, I can’t buy all the stocks I like at the same time. Plus, I would do a full review of risks and other issues to bear in mind before I buy any shares. However, I definitely believe cheaper shares right now are unmissable!
