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I’m searching for the best cheap UK shares to buy in March. Here are two I’d happily spend £500 on; I think they could make me excellent returns over the coming decade.

The right treatment

The rising pressure on the NHS is encouraging more and more people to seek private healthcare. Data just released by the Institute for Public Policy Research think tank shows that 31% of UK adults struggled to get healthcare access during the pandemic, and that 12% of these people ended up paying for treatment. This equates to a whopping 1.92m Brits.

The pandemic might be receding but the challenges to receive free healthcare look set to grow. Health secretary Sajid Javid predicts that the current record waiting list of 6m patients will continue growing for the next two years at least. Private medical care providers like Spire Healthcare Group (LSE: SPI), then, can expect demand for their services to continue soaring.

Buy before the surge?

UK shares like this face risks posed by changes in government health policy and an influx of cash to the NHS. But as things are today, the likes of Spire — whose latest financials showed revenues increase 38.9% year-on-year between January and June 2021 (and rise 13.5% from the same 2019 period, too) — can look forward to strong and sustained profits growth.

Indeed, I’m expecting another robust release from Spire when it reports full-year financials tomorrow (Thursday, 3 March). It’s an event I think could spark fresh share price gains (Spire’s already risen 44% over the past year).

At 225p per share, Spire’s share price trades on a forward price-to-earnings growth (PEG) ratio of 0.4. This is well below the widely-regarded benchmark of 1 that suggests a stock could be undervalued. And in my opinion it makes it one of the best healthcare stocks to buy today.

Another cheap UK share to buy

Vistry Group (LSE: VTY) is another low-cost share I believe could be too cheap for me to miss. As well as also trading on a sub-1 PEG multiple (0.6 in this case) this housebuilder offers massive dividend yields. At 7.9% for 2022, this smashes the broader forward average of 3.5% for UK shares.

The Vistry share price has spiked following the release of fresh financials today. The construction giant’s now 10% more expensive than it was 12 months ago. Yet that low PEG ratio shows that it still looks undervalued.

More good news!

On Wednesday, Vistry said that revenues and adjusted profits had rocketed 32% and 140% in 2021. It’s the latest of a string of positive releases as homes demand continued to outpace supply. And it’s a trend the business expects to roll on, too. Vistry says that it expects “a significant step up in profits and returns” in 2022 too and that forward sales are “very strong”.

There’s a risk that Vistry’s sales could suffer badly as Bank of England interest rates rise. But this is a risk I’d be prepared to take given the company’s exceptional cheapness. This is a cheap share which, like Spire Healthcare, I’d buy today to hold onto for the next 10 years.

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.

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One of the appealing points about investing in shares is the passive income potential some of them offer my portfolio. But if I do not take the dividends as income and instead reinvest them in a company’s shares, that could help me build bigger sources of income in the long term. There is one UK dividend share I would consider purchasing for my portfolio at the moment because I reckon reinvesting its dividends could help me double my money in under a decade.

High-yield FTSE 100 share

The company in question is tobacco producer Imperial Brands (LSE: IMB). Like some other tobacco companies, Imperial’s business generates a lot of cash flow. That enables it to pay out chunky dividends, which it currently does each quarter.

At the moment, Imperial’s yield is 8.4%. In other words, for each £1,000 I invested today I would expect to receive £84 a year in dividends even if the company does not raise its dividend. But there is also a risk that it could cut its dividend, something that happened a couple of years ago. After all, declining rates of cigarette smoking in most markets could hurt revenue and profitability in the coming years.

But if the dividend remains at its current level, and I reinvested the income from my shares in more shares at the current price, I would expect to have doubled the value of my investment in just nine years.

Doubling my money

The future is an unknown place, so any calculation like this always includes some assumptions. Only time will tell if they turn out to be correct.

For example, to double my money, I need the dividend level to remain the same as it is at the moment or higher, but also for the share price not to fall. If it did, perhaps because of the threats to Imperial’s business I mentioned above, that could mean that even with an 8.4% dividend reinvested each time, my holding takes longer to double in value.

Then again, the opposite might happen. If Imperial’s share price increases, that combined with the dividend could mean that I double my money in less than nine years. The Imperial Brands share price is up 21% in the past year, which I think could be because investors reckon tobacco shares have been beaten down too much. Still, a long-term share price fall is a real possibility. Imperial is down 57% over a five-year period, after all. That could mean that it has lots of room to rebound — or that in the long term, it is a falling knife.

My move on this UK dividend share

I hold Imperial in my portfolio and appreciate its income generation potential. I plan to continue holding it and hoping that the dividends will help me double my investment in under a decade.

As there are risks, however, I will not rely only on Imperial. I will maintain a diversified portfolio, including other non-tobacco shares I like for their income potential.

Christopher Ruane owns shares in Imperial Brands. The Motley Fool UK has recommended Imperial Brands. 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.

All of us can have different ideas and goals about money. But almost everyone likes the idea of financial freedom. To not have to think about how I will fund the rest of my life at the current standard of living would be pure bliss. And the way to get to this bliss is through proper planning and investments. Of course even the best laid plans can go awfully awry, as the haunting example of Ukraine shows right now. But to the extent that I can plan my investments, I think it is a good idea to do so and leave the rest up to the fates! And my plan is at least partly to put my money into FTSE 100 stocks.

2 FTSE 100 stocks I like

There are a number of stocks in the index that can help me inch towards the objective of financial freedom. Like two that I intend to discuss here. The first of these is Bunzl (LSE: BNZL) and the second is Croda International (LSE: CRDA). If I had bought them 10 years ago, they would have more than tripled my money by now. 

Perhaps that is why they are highly coveted by investors. This is evident from the fact that they are priced at a premium, as seen from their market valuations. Bunzl has a price-to-earnings (P/E) ratio of 22 times. And that for Croda International is 30 times.The FTSE 100 P/E is 15 times right now as per Bloomberg numbers, which gives some perspective on the matter.

Healthy results

Still, I think it is entirely possible that these stocks could continue to reward investors over the long term. This is obvious after looking at their recent results. Consider Bunzl first, which is a global distributor of products from food packaging to personal protective equipment. Its adjusted numbers, which indicate the health of the underlying business, have been impacted because of ongoing Covid-19-related trends in 2021. But on a statutory basis, its earnings are improved from last year. And with economic recovery underway, I reckon it can continue to strengthen further. 

Croda International, which provides speciality chemicals to industries like personal care and life sciences, has seen a big jump in both revenue and earnings from 2021 compared to the year prior. In this case, the growth is also mirrored in adjusted numbers. This goes a long way in explaining why it is trading at a premium right now. Management is also optimistic about 2022. 

What I’d do

I am convinced for these reasons that the share prices for both can rise. In fact, I have long liked them. The question on my mind is when I should buy them. In the case of Croda International, a significant price correction has happened so far this year. I can wait and watch for the next few weeks to see if that will continue and if it does, it would be a good idea to buy it when its valuation is closer to the FTSE 100 P/E. In the case of Bunzl, I could wait for another earnings release just to be double sure that this is a good time to buy it, which I think will happen down the line in 2022. 

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl and Croda International. 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.

If I wanted to start generating passive income now, I would buy dividend shares. While some passive income ideas come and go, I expect building a share portfolio is something that could help me over the long term. On top of that, I could start doing it even with no savings. Here is how.

Dripping a little often

If I put £3 a day into a kitty, I would soon see my savings starting to add up. That would be the basis of my passive income plan – I could use this money to start buying dividend shares.

Although £3 a day may not sound like a lot, within a year it would add up to more than £1,000. That could help set the foundations for increasing my income in years to come. In the beginning, the passive income may not seem like much. For example, if I invest my first year’s savings in shares with an average dividend of 5%, I would expect an annual passive income of around £55. But if I keep drip feeding just £3 each day into my pot, over time the income should hopefully get to more significant levels.

Dividend shares as passive income ideas

Simply saving the money will not earn me the sort of passive income I want. Instead, I would plan to invest it. But as share dealing usually involves costs like fees, I would wait several months before investing as by then my cash pile would be growing.

I could put that time to good use by researching the kinds of shares that might best suit my risk profile. I would only invest in shares of companies I think I understand. That would help me in assessing how likely they are to keep paying their dividend in future. Even a big company like BP or Shell can cut its dividend – they both did in 2020. So I would not focus only on size, or how big the dividend is at the moment.

Instead I would be looking to see what the company might be able to earn in future to pay out as dividends. That is a judgment on my part and to make it I would consider things like whether a  company has a sustainable competitive advantage that could help it make a profit even in changing markets. No matter how good my research, unexpected events could still lead to a company cutting or even cancelling its dividend. That is why I would spread my investments over different companies and business areas.

Passive income for life

Nobody knows what will happen in future when it comes to a company’s dividend. So although I think buying a diversified portfolio of shares now could help me earn passive income until I sell them, that might not turn out to be the case.

But that would be my goal. To improve the chance that I can generate passive income over the very long term, I would diversify my portfolio across a wide range of dividend shares in a variety of industries.

Christopher Ruane 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.

International Consolidated Airlines (LSE: IAG) started off well in February, after going nowhere much at all in January. But in the second half of the month, the IAG share price turned downward. And by the end of February, we were looking at a 5% drop for the month.

The airline operator brought us full-year 2021 results on 25 February, but the shares were already slipping before that date. Results day, though, did bring a one-off 5% price gain, but the shares resumed their fall the very next day. So what was in those results to justify the month’s drop? I didn’t see anything to worry me.

Many eyes were on passenger volumes in the fourth quarter, with the company having previously targeted 60% of 2019 capacity. In the event, IAG recorded a figure of 58%. That’s slightly below expectations, but hardly significantly. And it does represent solid progress from the 43% reported for Q3. Saying that, overall capacity for the full year reached only 36% of 2019’s levels. But given the year it was, I think I’m happy enough with that.

Worldwide catastrophe

The Russian invasion of Ukraine can’t have helped in the final days of the month. It might perhaps seem a bit disproportionate worrying about the war’s effects on commercial aviation and on IAG’s outlook. And, yes, any shareholder hardship pales in comparison to the suffering of the Ukrainian people. But it’s still relevant to document the likely effect on the IAG share price.

The 2021 results themselves looked pretty good to me. Compared to 2020, total revenue increased 8.3% to €8.5bn. Admittedly that’s comparing to the worst year of the pandemic. But 2021 was still tough, and that’s heading very much in the right direction.

IAG reported an operating loss of €2.8bn, which might seem a bit painful. But it’s a huge improvement on the €7.5bn loss recorded for the previous year. The company also spoke of “significantly improved operating cash flow of €1.0bn in the second half of 2021, driven by positive EBITDA in quarter four, strong forward bookings and favourable working capital.”

IAG share price future

Positive earnings in the final quarter is a significant achievement. And it does suggest 2022 could be a much better year. Could it really be the year when the IAG share price finally manages a sustained upward run?

Speaking of its 2022 outlook, IAG “expects its operating result to be profitable from quarter two, leading both operating profit and net cash flows from operating activities to be significantly positive for the year“. That does, however, depend on there being “no further setbacks related to Covid-19 and government-imposed travel restrictions or material impact from recent geopolitical developments“.

Oil prices soaring

Then there’s the rapid, sudden increase in the oil price, which has pushed up above $110 per barrel. Again, that’s all part of the rest of the world’s response to Russian aggression and condemning it to the pariah status it deserves. And those developments are, surely, behind the February weakness in the IAG share price.

Had the tragic events of the past week not unfolded, I reckon we’d be looking at a more bullish market response. For now, once again, I’ll sit and watch IAG from the sidelines.

Alan Oscroft 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.

Hydrogen company shares could be set to boom as Europe seeks to disentangle itself from Russia. Following the country’s invasion of Ukraine last week, Germany has finally cancelled the controversial Nord Stream 2 project, a pipeline set to supply Germany directly with Russian natural gas.

I think this will result in an accelerated transition to renewable energy production across Europe. This could potentially create room for hydrogen fuel companies to flourish, particularly as a replacement for natural gas.

The benefits of hydrogen

Hydrogen is an abundant and reactive element with a lot of benefits to its adoption. We can produce it without releasing carbon dioxide. (Green hydrogen comes from running water through an electrolysis machine). Like oil or gas, we can burn hydrogen for heat or run it through a fuel cell to create electricity.

Hydrogen also acts as a store of energy. It must be pressurised and cooled but it can then be transported. Electricity loses energy the further it has to travel which is why we can’t power Europe with solar panels in the Sahara.

Use cases

One important use case is that hydrogen fuel could run industrial machinery. Electric cars function well enough on batteries, but heavier machines like buses, trucks, and diggers weigh too much. Just last year, JCB signed a multibillion-pound deal to supply green hydrogen to the UK, showing it recognises the possibilities hydrogen fuel offers.

Most importantly for the current moment, however, hydrogen could also be pumped into homes as a way to heat boilers and light gas stoves. Staffordshire university began mixing hydrogen into its gas supply back in 2020 and have seen no negative effects so far. The Energy Networks Association believes hydrogen could make up to 20% of all gas in the national grid by next year if policy makers are willing to make the switch.

Hydrogen shares

The UK has two home-grown companies that could exploit a sudden uptick in demand for hydrogen gas.

ITM Power manufactures the electrolysis machines needed to produce green hydrogen. The company announced several new expansions and partnerships over the previous year, but so far remains unprofitable. This doesn’t concern me too much at this stage. ITM has managed to consistently raise money without going into debt, showing a strong degree of investor confidence.

Another UK company I’d consider adding to my portfolio is AFC Energy. This Surry-based company manufactures the fuel cells needed to use hydrogen as a fuel. AFC has an advantage over its competitors because of a patent it owns on alkaline fuel cells. This new design can generate energy from lower purity hydrogen and is an innovation that could significantly reduce fuel costs for companies.

Unfortunately, AFC suffers from the same issue as ITM Power — unprofitability. However, I still believe it has great growth potential. I think once the demand for hydrogen increases, the market will be eager to find cost-cutting innovations like the ones AFC provide.

Final thoughts

There are a lot of risks in investing in companies like ITM and AFC. Hydrogen is not yet recognised as a highly valuable commodity. But current events in Europe have shown the important role renewables have to play. Not just for the green transition, but security.

Provided the companies can stay afloat over the coming years, hydrogen shares have the chance to explode in value. So I will be adding both ITM Power and AFC to my portfolio.

James Reynolds 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.

Key points

• The Evraz share price has plummeted 63% in the past week, because of the ongoing military situation in Ukraine
• There are fears the company could be targeted with Western sanctions
• Financially, the firm is strong with free cash flow up to $2.26bn from $1.02bn

In recent days, the Evraz (LSE: EVR) share price has plummeted. The company specialises in iron ore and coal mining, and operates in the U.S., Canada, Czech Republic, and Russia. As one might expect, the reason for the collapse in the share price has been the recent military action by Russia in Ukraine. As a Russian business, some investors are worried that Western sanctions will target the firm. However, I want to look below the surface to determine how attractive the business is based on its results. Let’s take a closer look. 

Recent events and the Evraz share price

The escalating military campaign by Russia against Ukraine caused panic in markets around the world. In the past week, the Evraz share price is down 63%. It is currently trading at 96p. However, the company is not alone in this price move. The share prices of gold companies Polymetal International and Petropavlovsk, and iron ore business Ferrexpo, have all collapsed too.

There is a lot of fear among investors that Evraz, or individuals within the management, could face international sanctions by Western governments. While I recognise that this is a possibility, nothing has yet materialised. Of course, the longer the war rages the worse the situation becomes for all, including the Evraz share price. For the sake of an end to suffering, I hope a ceasefire is announced very soon.  

Strong financial results

Looking past the recent turmoil and its impact on the Evraz share price, the underlying financial state of the business is solid. Between 2017 and 2021, revenue grew from $10.8bn to $13.4bn. Furthermore, earnings-per-share (EPS) rose from ¢49 to ¢208. This tells me the firm is delivering for its shareholders year in, year out. Also, iron ore production increased by 1.4%, year on year.  

Additionally, free cash flow improved to $2.26bn from $1.02bn in 2020. This was complimented by a decrease in net debt from $3.36bn to $2.67bn. This suggests to me that the company is in a strong financial position. I am confident it can ultimately weather the ongoing storm. 

Evraz’s trailing price-to-earnings (P/E) ratio of 2.64 is lower than the 3.28 of Severstal, a major competitor in the steel market. While this potentially indicates that the Evraz share price is cheaper, I’m not sure how much use this metric currently has, given recent market volatility. In essence, the P/E ratios may be artificially low because of the dramatic collapse of the share prices.  

Based on its results, I think Evraz is a good company. Given the current situation, however, I will delay any purchase. I would like to see an improvement in conditions in Ukraine before I think about buying shares, but I will not rule out a purchase in the future.

Andrew Woods owns shares in Polymetal International. 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.