Looking for the best low-cost stocks to buy this month? Here are two great UK shares I think savvy investors should seriously consider.
Firing higher
European defence shares are soaring following recent developments in the tragic Ukraine War. Yet some, like London-listed Babcock International (LSE:BAB), still look extremely cheap on paper.
Amid wavering US support for Kyiv, other NATO members — which had been poised to hike defence spending regardless of recent events — are making plans to turbocharge their arms budgets. European Commission President Ursula von der Leyen on Monday (4 March) detailed plans to boost European Union defence spending by a whopping €800bn.
The UK has also pledged to raise defence spending to 2.5% of domestic gross domestic product (GDP) by 2027, three years earlier than planned. This bodes well for Babcock, which sources 60% of group revenues from the Ministry of Defence.
The FTSE 250 business also has strong links to other NATO members, including France and Canada (as well as Australia, a key partner of the bloc). This helped drive organic revenues 11% higher in the six months to October.
I believe Babcock shares trade at a tasty premium to the broader defence industry. Its price-to-earnings (P/E) ratio of 14.1 times is well below corresponding readings of, for example:
- 21.4 times for BAE Systems
- 20.4 times for Chemring
- 36.2 times for Rolls-Royce
- 16.6 times for Lockheed Martin
- 31.4 times for Safran
Supply chain issues remain an issue that could impact project delivery and push up costs. But on balance, I think Babcock shares deserve a very close look today.
Gold surge
Precious metal stocks are also rising rapidly due to tension over the geopolitical landscape. Since the beginning of 2025, they’ve been swept higher by robust safe-haven demand for gold and silver.
Since 1 January, gold has risen 11% in value.
I feel FTSE 100-listed Fresnillo (LSE:FRES) could be one of the best stocks to consider to capitalise on this theme. And as well being a significant gold producer, it’s the world’s largest silver miner, and last year dug up 56.3m ounces of the grey metal. Gold production came out at 631,000 ounces.
There’s no guarantee that the mining sector boom can continue. Commodity markets are famously volatile, and a cocktail of factors — from changing market confidence to supply-related news — can emerge to whack prices (and with them Fresnillo’s profits).
But on balance, I think there’s a good chance that gold and silver’s bull run will carry on, driven by:
- Fears of escalating conflict in Eastern Europe
- A stream of new trade tariffs that cool global economic growth
- Increasing inflation as a result of new trade taxes
- A weakening US dollar that makes buying dollar-denominated assets more cost effective
Fresnillo’s dual presence in silver and gold helps the company to spread risk. Furthermore, it may allow the business to benefit from an economic recovery that boosts industrial silver demand.
For 2025, the shares trade on a P/E ratio of 12.1 times. They also carry a price-to-earnings growth (PEG) ratio of 0.1. I think this represents solid value for money and makes the stock worth considering.
