Between the pandemic and Brexit, London shares still look cheap compared to global prices. The price-to-earnings ratio Is much lower than US stocks, which is one reason I am looking for cheap UK100 shares to buy now. Here are two I’m looking to buy this week.
Engineering firm Babcock (BAB.L) has at a tough few years, and its stock prices just kept falling. Last month things took a turn for the worse, after the company announced that it may need to write down the value of some of its contracts. Why is this among my list of cheap UK shares to buy now you ask?
Well I think the warning of the contract issue was actually good news. It wasn’t signalling that the business value has drastically deteriorated, bu it showed that new management were taking a good look at how best to account for the company’s performance. The company’s shares now suggest a company valuation of just £1.3 billion which seems low for a company with government contracts and a £17 billion forward load. Note sever large puchases from the directors last month also give me confidence that the company is heading in the right direction.
Imperial Brands (IMB.L) This company continues to focus on cigarettes, and this worries some analysts given the shift to Vaping in recent years. However, I still have Imperial on my list of cheap UK shares to buy now for several reasons; a strong 10% dividend is something that not any other companies can compete with. Also the business owns brands such as Rizla and John Player Special. While cigarettes are declining in developed countries, it continues to have the lions share of the market. The company’s recent strategy session with investors indeed emphasised plans to offset volume declines by continuing to increase prices.