3 cheap stocks to buy now to fast-track my year
3 cheap stocks to buy now to fast-track my year
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January can feel like a long, slow month. And it’s going to be a long year ahead, especially when it comes to the stock market.
So if I can find some cheap stocks to buy in January that can supercharge my 2023, I’m keen to act. After doing my homework, here are a selection of shares I’m looking at buying for just that purpose.
Building on strong 2022 growth
Investec (LSE:INVP) is a FTSE 250 listed bank that might not be one of the top tier UK names, but is still a company that can offer me attractive returns. The price-to-earnings ratio (P/E) is at 9.63, below my usual ‘fair value’ figure of 10. What makes this ratio figure even more impressive is that the share price has risen by almost 32% in the past year.
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The company has been performing well, with the interim results through to the end of September showing a 25.1% growth in earnings per share versus the same period last year. With the dividend per share having also increased 22.7%, I can earn income from this dividend stock going forward.
However, funds under management did drop by 7.6%. I know that the volatility in financial markets has caused some to pull money out from places such as Investec, but it can’t afford to keep seeing investor outflows in 2023.
Buying on the low
Next up is Bridgepoint Group (LSE:BPT). The business specialises in private equity and private credit investments, with over £32bn in assets under management. In contrast to Investec, the share price for Bridgepoint has fallen by 60% in the past year.
The company has found it challenging to exit privately-held investments recently, due to the gloomy economic outlook. There’s also the risk it can sell an investment at a much reduced price. After all, these are private companies and it’s nowhere near as easy as selling stock in a listed business.
However, I feel the share price fall has been excessive and represents fear instead of rational decision-making. In a November update, Bridgepoint said it was on track to meet full-year targets. On this basis, I think it’s a good buy now. It’s trading close to the lowest level since it went public in 2021.
A stock to buy for lower inflation
Finally, my last pick for a good value stock is Tesco (LSE:TSCO). With a P/E ratio of 10.75, it only ranks as ‘fair value’ on that scale. But I think the share looks cheap when I consider the outlook.
The share price has fallen by 20% over the past year as grocery inflation has climbed and climbed. Yet the latest November figures showed inflation fell for the first time in 21 months. Granted, it only inched down 0.1%, but at least it didn’t rise.
I think we are close to peak inflation here in the UK. If I’m right and inflation falls later this year, people will likely increase their spending at Tesco as their money goes further. Even though it won’t be a perfect correlation, easing inflation should allow the stock to regain some/most of the 20% inflation-induced drop from 2022.
I think the above stocks could outperform in 2023 and so I’m likely to buy all of them shortly.
Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco Plc. 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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