Following recent stock market volatility, I have been searching for bargain shares to buy. A couple of companies have attracted my attention for their discount valuations and potential over the next few years.
As such, here are some of the bargain shares I would buy today for my portfolio.
Bargain shares
The first company on my list is the automotive retailer Vertu Motors. Surging used-car prices are set to send this firm’s profits 270% higher this year.
This growth seems unlikely to last, but the organisation is looking to reinvest its windfall profits into additional growth initiatives. These could help underpin the company’s expansion plans for years to come.
Considering this potential, I think the market is undervaluing the business. It currently trades at a forward price-to-earnings (P/E) multiple of 8.5 for 2023.
Another corporation seeing surging demand is homebuilder Redrow. The company and its peers just cannot build homes fast enough. Its profits are expected to rise 25% this year as management capitalises on this growth.
Despite the growth potential, the stock is selling at a forward P/E of just 5.8. The shares also offer a dividend yield of 5.7%, at the time of writing.
The one main risk both of these companies might have to deal with going forward is that growth grinds to a halt. They are both benefiting from significant tailwinds in their respective markets, but an economic slowdown could slam the breaks on growth. That is something I will be keeping an eye on as we advance.
Growth champion
Integrated investment banking company Numis (LSE: NUM) has taken the City of London by storm over the past couple of years.
The corporation has cornered the market for helping smaller companies raise finance. Last year, its revenues jumped to £224m and net profit hit £58m, which was more than double the figure reported for 2016.
The group is investing heavily in its offer, while expanding its footprint in the UK market. Its reputation for helping businesses come to market is also boosting its profile.
That said, one issue of working in the investment banking business is that it is quite volatile. Last year was a bumper year for raising finance. That may not be the case this year. The company could suffer a slump in revenues as a result.
Despite these headwinds, I think the stock looks undervalued. At the time of writing, the shares are dealing at a forward P/E of 8.6. They also offer a prospective dividend yield of 5.2%.
Considering the company’s expanding footprint and brand strength, I think this multiple undervalues the enterprise and its outlook. That is why I believe this is one of the best bargain shares to buy now and would not hesitate to add it to my portfolio.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Redrow and Vertu Motors. 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.
