As the economy begins to rebuild after the pandemic, I looked for cheap UK stocks to add to my portfolio before the full reopening in July.
Here are five inexpensive businesses I would buy in July.
Cheap UK Equity Deals
The first is Marshall Motor Holdings. As the economy reopens and consumer confidence increases, I expect demand for new vehicles will also increase. This should lead to increased sales and profits for this car dealership.
He was able to navigate the pandemic by relying on used car sales. It is now poised to grow in the years to come as the economy recovers.
However, another economic downturn could hurt demand for vehicles, delaying Marshall Motor’s takeover.
To diversify my investments, I would also buy Vertu Motors for my portfolio of cheap UK stocks. I expect both companies to return to growth as the economy reopens.
That said, they operate in an incredibly competitive market, which can put profit margins under pressure. Meanwhile, new pandemics could also suppress demand.
Marshall is trading at a forward price / earnings (P / E) multiple of 8.6 while Vertu is trading at a forward P / E of 7.3.
Elsewhere I would buy too Secure Trust Bank and H&T for my portfolio of cheap UK stocks.
These financial stocks target two different segments of the market. H&T offers pawn shops and short-term loans, while Secure Trust offers corporate and consumer finance products, including loans.
Secure Trust trades at a forward price / earnings (P / E) ratio of 6.7 while H&T trades at a forward P / E of 10.6.
As the economy reopens, I think consumer confidence will improve. As the labor market recovers, workers may feel more secure about their employment prospects. This can mean that they are more likely to take out loans to finance large purchases.
As such, Secure Trust and H&T can take advantage of the growing demand for their services from their various market segments. That’s why I would buy both stocks in July.
One of the main challenges that both companies face is competition from large lenders who have large piles of money to lend. This could weigh on profit margins. Another foreclosure can also restrict the demand for loans.
The final share I would buy for my portfolio of cheap UK stocks in July is N Brown. I think clothing retailers could see their revenues increase as consumer confidence improves over the next few months.
N Brown is well positioned to capture part of this business as it is a digital fashion retailer. This could help it to gain market share in its niche sectors.
Group sales fell last year, but profits are expected to come to life again this year. And based on these City projections, the stock is currently selling at a forward P / E of 7.9.
These are the reasons I would buy his stock. However, I must note that the fashion industry is incredibly competitive and over the past year we have seen some big name companies collapse. If customers go elsewhere, that could also happen to N Brown.
Rupert Hargreaves has no position in any of the stocks mentioned. The Motley Fool UK recommended Vertu Motors. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of ideas makes us better investors.