Following the recent bout of stock market volatility, I have been looking for cheap UK shares to add to my portfolio. As the UK economy begins to recover from the pandemic, I think these shares have the potential to benefit from both a valuation and growth uplift in the years ahead.
With that in mind, I would acquire all three of the stocks outlined below for my portfolio today with an investment of £1,000.
UK shares with growth potential
The first company on my list is the technology retailer Currys (LSE: CURY). I have been watching this business for some time, as the group has been undergoing a significant restructuring over the past couple of years.
It looks as if these restructuring efforts are now beginning to pay off. According to the latest projections from the company and City analysts, the group’s net income will hit £133m in 2022 and £179m in 2023. This puts the stock on a 2023 forward price-to-earnings (P/E) multiple of 6.7.
Unfortunately, due to the uncertainties of the retail industry, this growth is not guaranteed. Any number of factors could cause the enterprise to miss these projections, including inflation pressures and a deterioration in consumer confidence.
Still, considering the company’s growth potential and cheap valuation, I think this is one of the best UK shares to buy with £1,000 today.
Market expansion
I do not think any article on cheap UK shares would be complete without mentioning a homebuilder. Shares in Bellway (LSE: BWY) are currently selling at a forward P/E multiple of just 7. Despite the booming UK housing market, the stock is trading at this depressed level.
Investors have been selling the shares as they are concerned about its exposure to the cladding scandal. All builders face significant financial penalties due to the sector’s involvement in the scandal. This could be a considerable risk to the company, and it is something I will be keeping in mind.
However, considering the state of the UK housing market and the fact that demand is outpacing supply, I think the corporation should be able to overcome any short-term headwinds with long-term growth.
As well as the company’s cheap valuation and growth potential, the stock also offers a dividend yield of 4.5%.
Trading giant
The buying and selling of UK shares can be a lucrative business, especially during periods of market volatility and uncertainty. This is why I would buy CMC Markets (LSE: CMCX).
The financial trading firm allows investors to bet on the direction of markets using derivatives and other products. It takes a tiny slice of profit from each trade. All of these little transactions add up to big profits.
The biggest challenges the company faces are regulation and competition. Dealing with regulatory and competitive forces could significantly impact profit margins and growth.
Despite these risks, the stock sells at a forward P/E of 9.3 and offers a dividend yield of 4.2%. With a cash-rich balance sheet and further growth projected, I think the stock has huge potential over the next few years.
Rupert Hargreaves 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.
