UK stock markets ended last week strongly as the panic among investors cooled. More market volatility could be around the corner as the tragic war in Ukraine unfolds. But there are many greats stocks I think are too cheap for me to miss right now.
Here are two share prices I think are too low to ignore today.
Too cheap to miss?
The global economy remains shrouded with danger as runaway inflation picks up speed (US consumer price inflation hit new 40-year highs in February, figures showed this week). This creates massive risks to economically-sensitive shares like recruitment firms. Yet at the same time, signs have emerged that the inflation boom could be fuelling the jobs market.
For this reason I’m considering buying Hays (LSE: HAS), a UK share which provides hiring services across the globe. The British labour market remains rock solid and recruiter Totaljobs suggests it could remain so. Its latest survey shows that around two in five Britons are considering better-paid jobs as the cost of living crisis worsens. This is a theme that is likely to be replicated in other countries too.
Indeed, strong trading across all its territories encouraged Hays to lift its full-year earnings forecasts in February. Then it advised that “conditions in all [our] markets are strong, driven by high levels of business confidence, significant job churn and clear evidence of wage inflation”.
Hays is one of many top stocks whose share prices today don’t reflect their bright earnings outlook. City analysts think earnings here will soar 128% in the financial year to June. They believe that profits will advance an extra 23% next year too.
Consequently, the recruitment giant trades on a forward price-to-earnings growth (PEG) ratio of just 0.1. Any reading below 1 suggests that a stock could be undervalued.
Another low share price today
And being undervalued is a characteristic Hays shares with logistics business Wincanton (LSE: WIN). Current forecasts suggest Wincanton’s earnings will rise 17% in the financial year ending March. This means that following recent share price weakness the company trades on a forward PEG ratio of 0.5.
Wincanton had a strong record of consistent annual earnings growth before Covid-19 struck. And thanks to the steady growth of e-commerce City brokers expect a period of sustained profits growth to emerge again. This is perhaps no surprise given the strength of trading recently. Latest financials showed revenues at Wincanton’s Digital and eFulfilment division jump 22% (excluding recent acquisitions) in the three months to December.
The main problems for Wincanton today are those of rising fuel and labour costs. Diesel prices in the UK struck another fresh record (of 170p a litre). Driver salaries are also rising because of a shortage of available workers.
Still, it’s my opinion that these dangers are baked into Wincanton’s ultra-low share price today. I think the potential rewards of me buying both Wincanton and Hays at their share prices today far outweigh the possible risks.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
