Market volatility continues to reign as concerns over the Ukraine crisis simmer. On Monday the FTSE 100 jumped higher early on before retreating in afternoon trade as the political ping pong between Russia and the West entered a new phase.

It seems as if this market volatility could remain in play for some time yet. The VIX index — an instrument that reveals trader expectations for volatility for the next 30 days — is rising yet again. Since the beginning of 2022, it’s increased a whopping 67% as military action in Europe has drawn closer.

Market volatility drags on

A conflict in Ukraine would be a tragedy. And it could have significant geopolitical and macroeconomic consequences. So it’s no surprise that traders and investors are getting hot under the collar. However, as someone with a long-term approach to investing I’m not selling any of my holdings. In fact I’ll look to add to my stocks portfolio even if a stock market crash occurs.

I have a long list of top UK shares I’m seeking to buy for my stocks portfolio. I’m confident that almost all of them will deliver excellent shareholder returns in the years ahead, irrespective of what happens in the short term. These could fall to dirt-cheap prices if stock market volatility continues for whatever reason, providing an excellent dip-buying opportunity for me.

2 UK shares I’m looking to buy

Here are two of the best UK shares I’ll be looking to buy if markets remain volatile.

#1: Redcentric

Tech company Redcentric provides the IT systems that allow workers to do their jobs remotely. I’m therefore expecting profits here to leap as the ‘work from home’ phenomenon continues. A whopping 80% of businesses have now fully embraced flexible working, according to a recent survey, and they’ll have to invest heavily in their systems to make it work effectively.

Redcentric builds networks, security software, cloud platforms and communications systems. It therefore has the potential to win a lot of business as the digital revolution takes off. Despite the threat of huge competition — it will have to paddle very hard to succeed against US giants like Microsoft and IBM, for example — I think it could still deliver exceptional returns given the predicted rate of market growth.

#2: Big Yellow Group

I’d also look to buy Big Yellow Group if fresh market volatility pushes its share price lower. The self-storage company has fallen sharply in value as market conditions have returned to normal levels following an initial Covid-19 trade boost. I think the scale of recent investor selling has been over the top and that the long-term outlook here remains compelling.

There are a number of reasons I expect the self-storage industry to keep growing strongly. The rise of e-commerce — and retailers’ need for more space to keep stock — is one. A healthy housing market is another. Pleasingly Big Yellow plans to continue growing its estate to capitalise on this fertile environment (it opened a new 73,000-square-foot store in West London last month). I’d buy it even though demand for its space could slip if economic conditions worsen.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Microsoft. 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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You know how the saying goes, “Day by day nothing changes, but when you look back everything is different”? When I look at the FTSE 100 index, it is a bit like that. Over the past year, on average, the London Stock Exchange’s headline index has increased by only 0.1% every day. But over the last year, it is up by more than 13%! 

If it were to continue to show the same growth over the next year, by February 2023, it would be close to 8,500. And that in itself, in my view, is reason to be hopeful that the index could well touch the 8,000 mark before 2022 draws to a close. That the index would in fact touch these levels in 2022 has been said by multiple forecasters, including me, last year. My rough cut estimates put the likelihood of that happening by September this year. 

Robust economic recovery

But now, I think it could happen even sooner, going by the recovery underway. The official numbers for the UK economy look encouraging, as per the latest reading, in any case. And latest survey figures endorse the recovery even further. IHS Markit’s Purchasing Managers Index (PMI) grew at the fastest pace in eight months in January, indicating rising business optimism. 

As we know well, the stock markets are typically ahead of the curve. This means, that by the time the numbers for full economic recovery show up in print, they would already be priced into the the FTSE 100 index. Note that the the index is not dependent on the UK’s recovery alone. Many of the companies in the index are multi-nationals with interests across the world. But even then, there are companies from banks to builders that are deeply invested in the UK market. So the fact that the UK economy is doing well or expected to do so, is a definite positive for the index. 

End of the pandemic

After almost two years of the pandemic, it appears that the expectation of robust performance could continue. We have come a long way since the first lockdowns, and now we are looking at their being removed entirely in the coming days and weeks. If all goes well, this could really prop up investor sentiment in my view, that could even result in a stock market rally. And if that happens, before we know it, the FTSE 100 index could touch 8,000. 

Risks to the FTSE 100 index

We have to be cognisant of the risks from another coronavirus variant, however, which might just send us back into a lockdown. Also, inflation could spoil the party. At 5%+ rates, price rises are the big risk to investing in 2022 as far as I can see. Companies have hedged themselves by now, though, and some companies like oil producers and banks are actually gaining because of rising prices. So I think there is still a lot of room for optimism! I think we are headed towards FTSE 100 at 8,000 sooner rather than later. 

Manika Premsingh 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.

I’m thinking of buying these top FTSE 250 shares today. Allow me a few minutes of your time to explain why.

Too cheap to miss?

Car retailer Motorpoint Group (LSE: MOTR) is tipped for strong and sustained earnings growth in the medium term. A 123% improvement in full-year profits is expected in the current fiscal period to March 2022. A 20% rise is anticipated for financial 2023.

Yet despite these bubbly predictions Motorpoint still trades extremely cheaply. This share trades on a forward price-to-earnings growth (PEG) ratio of just 0.1.

I don’t think this reading reflects how robust business is, and is likely to remain, at Motorpoint. Supply chain problems in the new car market are sending demand for pre-owned vehicles through the roof. The retailer in fact said that revenues and profits would come in “significantly ahead” of expectations when it last updated the market in November.

Motoring on

Fresh data on the second-hand car market has boosted my expectations of another blockbuster update when it releases its full-year trading update in early April, too. According to Auto Trader, the average price of a pre-owned vehicle has risen 29% over the past 12 months. Price increases are accelerating as the shortage of new stock worsens.

Of course, Motorpoint could suffer if a chronic shortage of used vehicles emerges and it ends up with half-empty forecourts. But this is a risk I’d be happy to accept given the company’s massively cheap share price. A combination of strong industry fundamentals and robust market share gains makes Motorpoint a top cheap stock for me to own today.

Ready for action

Geopolitical tension is at its highest for decades as Russia’s military perches outside Ukraine. Fears of fresh conflict between the West and emerging nations Russia and China have been growing for some years, though, a phenomenon which saw global defence spending rise at its fastest pace for 11 years in 2020.

Another hefty yearly increase is expected when the Stockholm International Peace Research Institute releases 2021 numbers in April. The ratcheting up of military posturing in Eastern Europe today means arms expenditure can be expected to keep rising strongly in 2022 and beyond, too.

As a result I think companies like Chemring Group (LSE: CHG) can expect demand for their goods to continue growing strongly. In fact City analysts think that this particular UK defence share will experience earnings growth of 8% and 4% in the next two financial years (to October 2022 and 2023 respectively) alone.

A FTSE 250 firework

Chemring manufactures flares and decoys which protect planes and ships from missile attack. The company sells more than half of its tech to the US, though it is also a major supplier to British and Norwegian armed forces.

It’s important to look at the dangers facing Chemring, of course. One of the main worries I have is that its critical life- and equipment-protecting systems have to be impervious to failure. Any other outcome could have disastrous consequences for Chemring’s future orders.

Still, it’s my opinion that Chemring’s undemanding valuation reflects this ever-present danger. At 260p per share, this share trades on a forward P/E ratio of just 14 times. I’d happily buy the FTSE 250 firm for my portfolio right now.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader and Motorpoint. 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 travel firm TUI may see its share price rise from the reopening of international borders
• BHP Group mines copper, a precious metal used in the development of electric vehicles
• Both companies could be a great place for me to invest £1,000

With £1,000 to invest in the stock market, I’m on the lookout for the best shares to buy now. Having scoured the indexes, I think I’ve found two great companies. The first, TUI (LSE: TUI), is a travel firm that may well benefit from the global reopening after the Covid-19 pandemic. Secondly, BHP Group (LSE: BHP) is a business that mines a number of commodities, like iron ore and copper. These commodities can have many uses in a number of industries. What justifies investment in these companies? Let’s take a closer look. 

Are travel companies the best shares to buy now?

For the three months to 31 December 2021, TUI reported positive results. Revenue was €2.4bn, compared to a mere €0.5bn for the same period in 2020. Furthermore, the number of passengers increased by 1.7m to 2.3m, with a load factor of 79%. This tells me that more aircraft are flying more passengers.

With a strong liquidity position of €3.3bn, the firm may also benefit from the reopening of borders. Just this month, Norway removed all its pandemic-related restrictions. Switzerland and Sweden have made similar moves. I think this could have a domino-effect, as more and more countries completely reopen.

This progress could be halted, however, if other variants arise in the near future. Nonetheless, the comeback of the tourism industry makes TUI one of the best shares for me to buy now.

Metals for the future 

The second company, BHP, mines a number of metals and coal. Indeed, iron ore and copper account for 80% of the company’s sales. In recent results for the six months to 31 December 2021, the firm reported a profit of $18.5bn. This is a 33% increase from the same period in 2020. 

Furthermore, the results showed a 27% gain in revenue to $30.5bn. While these figures are very encouraging, the iron ore price has suffered. This is chiefly because of policy changes in China that have reduced the need for the commodity.

Nonetheless, copper is essential for efforts to decarbonise. Specifically, this precious metal is a critical component of electric vehicles (EVs). In this sense, the business may well benefit from moves to create a greener world, potentially making it one of the best shares to buy now.

Both of these companies may experience an uptick in the near future. The world is reopening and this can only be a good thing for travel companies. With its strong liquidity position, I think TUI is a good investment at current levels. Furthermore, BHP’s exposure to important precious metals could be very positive indeed. I will be splitting my £1,000 evenly and buying shares in both of these stocks.

Andrew Woods 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.

The famous investor Warren Buffett has made a career out of spotting value many other people do not see. He has applied that in buying shares for his portfolio, from Bank of America to Apple.

I am applying the Warren Buffett method when it comes to buying cheap UK shares myself. Here is how.

Long-term source of value

When Buffett looks at a company, he basically tries to figure out what potential source of value it has that might last for decades. Does it have a unique formula like Coca-Cola, a large installed user base like Apple or a geographic monopoly?

I apply the same principles when it comes to UK shares. For example, companies such as Irn-Bru maker A G Barr and Guinness brewer Diageo both benefit from owning unique drinks brands. Firms from SSE to Sage can profit from their installed user bases. Some companies are the only large supplier of a key service in a given area, from Jersey Electricity to water supplier Pennon.

Current share price and valuation

But just having a long-term source of value is not enough to make a share attractive. That also depends on valuation.

After all, if other investors like the look of Diageo’s brand portfolio the same way that I do, demand for the shares could push up their price. In fact, that is one of the reasons I do not currently hold Diageo in my portfolio. Although I think it is a great business, the shares do not look cheap to me.

That matters because as an investor, the long-term return I get from shares I buy depends on their price, as well as any dividends they pay. So if I pay a high price for shares, even in a great company, I may still end up losing money.

Warren Buffett on value

That is why Buffett focuses on finding what he describes as great shares at a good price. Of course Buffett appreciates a bargain, so if he can get shares in a great company at a cheap price, his returns could be even better. But he settles for what he sees as a good price.

To determine that, many investors basically use what is known as a discounted cash flow model. In other words, they try to figure out what free cash flows a company will hopefully make in future. Then they apply a discount rate based on how far in the future such cash flows will be. Due to inflation, a pound today is probably worth a lot more in real terms than a pound a decade from now.

If a company’s shares trade at a significant discount to its future discounted free cash flow per share, it could mean that the price is cheap. But Buffett also considers other factors when he invests. For example, he looks at how much debt a company has. After all, that will reduce its ability to pay out future cash flows to shareholders as dividends.

Valuation is an art, not a science. But by applying the Buffett approach, I think I can spot UK shares in great businesses currently trading at a good price. Those are the sorts of shares I am looking for to add to my portfolio.

Christopher Ruane has no position in any of the shares mentioned. Bank of America is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has recommended AG Barr, Apple, Diageo, Pennon Group, and Sage Group. 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.

I’m searching for the best dividend stocks to buy for my portfolio right now. Here are two top UK income shares I think could be too cheap to miss.

Playing the retirement boom

I was flicking through the papers earlier today when I came across an extraordinary statistic. According to McCarthy Stone — a construction firm that builds homes for elderly people — demand for retirement properties is four times higher than current levels of supply. The Daily Telegraph story reflects the massive opportunity that Britain’s rapidly ageing population offers to share investors.

I used to tip McCarthy Stone a top stock to buy before its private equity takeover last year. But investors can still capitalise on soaring demand for retirement properties by buying Legal & General Group (LSE: LGEN). This FTSE 100 stock develops homes for retirees through its Inspired Villages and Guild Living divisions. Collectively these units have a combined pipeline of around 4,500 homes.

7.1% dividend yields

I like Legal & General because of the broad range of financial services it offers to older people. I reckon interest in its lifetime mortgages, pension plans, and other products for retirees should grow robustly as populations in its markets age. My main concern with buying this business is the massive competition it faces from other established players like Aviva, Zurich, and RSA Insurance.

That being said, this is a danger I’d be happy to accept given the cheapness of Legal & General’s share price. City analysts think earnings here will rise 5% in 2022. This leaves the company trading on a price-to-earnings (P/E) ratio of eight times. At current prices, Legal & General also offers a spectacular 7.1% dividend yield. This is more than double the current 3.5% FTSE 100 forward average.

Takeover action is heating up

Businesses that offer warehousing and logistics services also offer masses of investment potential as e-commerce takes off. This is reflected by fresh takeover action on the industry. On Monday, it was announced that US-based GXO will acquire Clipper Logistics — a UK share I actually own — for a cool £950m.

Clipper is a share I bought back in 2020 to make money from the internet shopping boom. The services it provides are essential in helping retailers and product manufacturers to reach the online consumer. I might take the cash I receive from Clipper’s sale and reinvest it in Urban Logistics REIT (LSE: SHED).

Another great dividend share to buy

At 176p per share, this property investment trust offers some serious value for money. City brokers think earnings here will soar 36% in the upcoming financial year (beginning April 2022). This leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.5. In addition, the dividend yield at Urban Logistics registers at a fatty 5%.

I think Urban Logistics is a particularly good buy for those seeking passive income from UK shares. Its position as a real estate investment trust means it has to pay a minimum of 90% of annual profits out as dividends. I’d buy the business — which operates scores of properties all over the country — even though a failure to locate decent acquisitions could hit profits growth later down the line.

Royston Wild owns Clipper Logistics. The Motley Fool UK has recommended Clipper Logistics. 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

• Cineworld was ordered to pay over £700m damages to Cineplex after a botched takeover deal
• Box office revenue is heading higher towards pre-pandemic levels
• A low P/E ratio suggests this company may currently be cheap  

With pandemic restrictions being eased around the world, cinemas are benefiting from increased footfall. While a litigation case overhangs the Cineworld (LSE: CINE) share price, box office revenue is increasing. Furthermore, a number of exciting films are due for release in 2022. Results are heading in the right direction, so I think this firm could be a great investment at the current price. Let’s take a closer look.  

Litigation

In mid-December 2021, the company was ordered to pay over £700m in damages to Cineplex. The reason for the damages was because Cineworld withdrew from a takeover deal. The cause of the withdrawal was chiefly Cineworld’s weakened financial position in the Covid-19 pandemic.

This news had a catastrophic impact on the Cineworld share price. It collapsed nearly 50% in one day. The company subsequently appealed the judgement of the Ontario Superior Court. It is unclear when the matter will be resolved.

In a more recent update, however, Cineplex appealed against Cineworld’s appeal. It seems that Cineplex is concerned the damage costs will be considered too high. This could mean that Cineworld has to pay a smaller amount than originally thought.

I think the Cineworld share price already factors in all the bad news. Any reduction in damages will not only be positive for the firm, but also for the share price. 

Recent trading and the Cineworld share price

In a recent trading update for the six months to 31 December 2021, revenue increased. For the month of December, box office revenue was 88% of the same period in 2019. Furthermore, the UK and Ireland October figure was 127%. 

This tells me that more people are going to the cinema. What’s more, current box office revenue is getting close to pre-pandemic levels. With final results due on 17 March, I will be watching very closely. If footfall and revenue continue to increase, I think the Cineworld share price could rocket.

More blockbuster films are scheduled for release too. This year, the likes of Jurassic World: Dominion and Avatar 2 will hit the screens. Nonetheless, I’m still keeping my eye on the company’s not insignificant debt pile of $8.3bn.

The Cineworld share price may also be cheap. A trailing price-to-earnings (P/E) ratio of 6.07 is far lower than Cineplex’s 40.73. This may indicate that Cineworld is a riskier investment. On the flip side, the prospects for growth could be greater.

The business is not without its problems. The debt pile and litigation are slightly concerning. Nonetheless, the pandemic recovery may translate to increased box office revenue in results next month. If this happens, the Cineworld share price could soar. I will be adding to my existing position.

Andrew Woods owns shares in Cineworld. 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

• This ETF tracks nearly the entire UK stock market
• It’s skewed towards larger companies like those in the FTSE 100 
• If the UK economy continues to do well, this fund is likely to perform strongly

I’m a great believer in taking a long-term outlook to investing and am generally optimistic about the UK stock market. Though the flagship Footsie dominates the press, I’m now considering the FTSE All-Share. This consists of the FTSE 100, FTSE 250, and FTSE Small Cap. This is a much broader range of companies, including around 98% of the UK stock market. I think that a fund tracking this index could be one of the best exchange-traded funds (ETFs) for my portfolio in the long run.

There are a lot of funds in this sector, but I’m looking at SPDR FTSE All-Share ETF (LSE:FTAL). This is large in size with over £600m of assets, has a relatively low management charge of 0.20%, and good trading volume. Unusually for me, this is an accumulation fund rather than a dividend-paying one. As this investment is definitely a long-term play for me, it makes sense to take the accumulation option. This automatically invests dividends rather than distributing them. Since I would only re-invest the dividends anyway, this is the cheaper option, as it would cost me fees every time I re-invested them myself.

Still one of the best ETFs for tracking the UK market?

Over 12 months, this fund’s price has increased by around 16%, but year-to-date it has fallen by just over 1%. However, it’s the long-term performance I’m most interested in. Over five years, an increase of almost 25% has been notched up. Over 10 years, it’s closer to 100%.

Of course, in investing, nothing is certain and there are some drawbacks. Firstly, FTAL only tracks UK companies. Although many of the firms will derive some of their earnings from overseas, this fund can’t really be described as geographically diverse. Over the last 10 years, the US stock market has had a fantastic run which this ETF would have missed out on.

Second, by buying an index fund, I can only earn the returns of the index. I think that by picking individual stocks I might be able to outperform it. Third, the larger companies, like those in the FTSE 100, make up a bigger proportion of the ETF. This means those firms have more of an impact on the overall performance of the fund.

However, I’m still a fan. The larger firms are in sectors like banking and traditional energy which could have a great 2022 if interest rates and the oil price continues to rise. Also, it contains around 600 shares, which provides a huge amount of diversification across company size and sectors. Even if one or two of the companies fail, this shouldn’t have a big impact on the fund as a whole. Moreover, I remain bullish on the UK economy in general, which could mean more upside potential to the SPDR FTSE All-Share ETF.

On balance, I think this is one of the best ETFs for investing in UK shares and am happy to consider adding it to my holdings as part of a balanced portfolio.

Niki Jerath 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.