2 dirt-cheap UK shares I think could explode in November
On the lookout for dirt-cheap UK shares? Here are two I’d buy for next month and aim to hold for years to come.
Forecast-beater
I think Ibstock (LSE: IBST) could be a great UK share to buy right now. In fact, I own shares in the brickmaker and believe the next trading statement on 3 November could be another barnstormer.
Ibstock said in August’s most recent update that it expected full-year EBIDTA to be “modestly” above expectations after announcing a 54% rise in revenues between January and June. Sales have been fast approaching pre-pandemic levels of late, it said, thanks to the strength of the UK’s housebuilding sector and robust spending on home improvements.
I’m convinced demand for Ibstock’s bricks will remain robust too. The colossal level of savings accrued during Covid-19 lockdowns means that DIY-related expenditure should remain favourable. And a mix of historically-low interest rates, an ultra-competitive mortgage market, and ongoing government support for first-time buyers should provide plenty of incentive for the housebuilders to keep building too.
Ibstock could experience a sales dip if broader economic conditions continue to worsen. This could deal a blow to housebuyer confidence and prompt consumers to tighten their purse strings. But to my mind these problems are more than reflected in the brick manufacturer’s ultra-low share price.
City analysts think the company’s earnings will soar 25% in 2022, leaving it trading on a price-to-earnings growth (PEG) ratio of 0.5 for next year.
A reminder that a reading below 1 suggests a UK share could be undervalued. Another forecast-beating update then could well help Ibstock’s share price rise sharply again in November following recent weakness.
Another cheap UK share I’d buy
I’m also thinking of buying Renewi (LSE: RWI) shares for my investment portfolio in November. I believe the recycling giant is a top long-term buy as the escalating climate emergency will steadily boost demand for its services. I think Renewi could be a particularly great stock to own next month too, as its share price also could jump when half-year financials come out on 9 November.
Renewi’s latest trading statement this month revealed that “increased volumes, improved recyclate prices and ongoing cost management” meant that trading continued to be better than expected. It noted that like-for-like sales were up 7% from pre-pandemic levels in the five months to September, and 10% than they were a year earlier.
Renewi has made a habit of beating analyst expectations in recent times. It explains why the company’s share price has soared a whopping 240% over the past 12 months. Yet despite these gains I think it provides exceptional value. City analysts think earnings here will increase 25% in the financial year to March 2022. This results in a forward PEG multiple of just 0.5.
Changing environmental legislation in Renewi’s markets could cause long-term profits to disappoint. But as of today, things are still looking exceptionally promising. Like Ibstock, I’d happily own this dirt-cheap UK share in my portfolio today.
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Royston Wild owns shares of Ibstock. The Motley Fool UK has recommended Ibstock. 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.
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