Investing in the stock market can be a rewarding and effective way to grow your wealth over time. Diversifying your portfolio by including a range of stocks from different sectors and industries is a proven strategy to minimize risk and maximize returns. One approach to diversification is adding cheap stocks to your portfolio. These stocks, often trading at lower prices, present an opportunity for investors to capitalize on their potential for growth, especially when they are undervalued or poised for a rebound.

This listicle aims to provide you with a selection of the best cheap stocks to buy now in the UK. We have carefully researched and analyzed each stock to help you make informed decisions and build a diversified portfolio. While investing in cheap stocks can carry risks, the potential for substantial returns makes them an attractive option for investors seeking to explore new opportunities. So, without further ado, let's dive into the top 10 best cheap stocks to buy now in the UK!

1. Premier Foods (PFD.L)

Premier Foods is a leading British food manufacturer, with a diverse range of brands under its umbrella. The company produces and markets a variety of well-known household brands, such as Mr. Kipling, Bisto, Oxo, and Ambrosia. Despite its strong brand portfolio, Premier Foods' stock price is relatively low at the moment.

There are a few reasons for Premier Foods' current low price. One is the uncertainty caused by the global pandemic, which has impacted supply chains and consumer demand. Additionally, the company has had to contend with rising raw material and transportation costs, which have put pressure on its margins.

However, there are several reasons to be optimistic about Premier Foods' potential for future growth. The company has shown resilience during challenging times and has managed to maintain its market share in core categories. Furthermore, Premier Foods has been focusing on cost-cutting measures, operational efficiency, and investing in innovation to remain competitive. These initiatives, coupled with the potential recovery of the overall market, make Premier Foods an attractive cheap stock to buy now in the UK.

2. Lloyds Banking Group (LLOY.L)

Lloyds Banking Group is one of the largest retail and commercial banks in the UK, offering a wide range of financial services to individual and corporate clients. With a strong presence in the UK, Lloyds has established itself as a leading financial institution in the country. Despite its strong market position, Lloyds' share price remains relatively low, making it an attractive option for those looking for cheap stocks to buy now.

There are several reasons behind Lloyds' current low price. One significant factor is the impact of the COVID-19 pandemic on the financial sector. The pandemic resulted in increased loan loss provisions and a decrease in overall consumer spending, which negatively affected the bank's profitability. Additionally, Brexit-related uncertainties have also played a role in keeping the share price low.

However, Lloyds Banking Group has a strong potential for future growth. The bank has been focusing on cost-cutting measures and improving its digital services, which should help increase efficiency and attract more customers in the long run. Moreover, as the UK economy recovers from the pandemic and Brexit-related uncertainties subside, Lloyds is expected to benefit from higher loan demand and increased consumer spending. Consequently, investing in Lloyds Banking Group could yield substantial returns in the future, making it one of the best cheap stocks to buy now in the UK.

3. Vodafone Group (VOD.L)

Vodafone Group is a multinational telecommunications company that provides a wide range of services, including voice, messaging, data, and fixed-line solutions. The company operates in numerous countries across Europe, Asia, Africa, and Oceania, making it one of the world's largest mobile network operators. Vodafone's current low price is primarily due to the highly competitive nature of the telecommunications industry, which has led to price wars among major players. Additionally, the company has faced challenges in certain markets, leading to weaker financial performance.

However, there are several reasons why Vodafone Group has the potential for future growth. Firstly, the company is well-positioned to benefit from the ongoing global rollout of 5G networks, which is expected to drive a surge in demand for high-speed data services. As a leading player in the industry, Vodafone has already made significant investments in 5G infrastructure and is actively expanding its 5G coverage. Secondly, the company's diverse geographical presence provides it with multiple growth opportunities in emerging markets, where smartphone penetration and demand for mobile services are on the rise. Finally, Vodafone has been taking steps to streamline its operations and reduce costs, which could lead to improved profitability in the long term.

Investing in Vodafone Group now could prove to be a smart move for investors seeking exposure to the telecommunications sector at a low price. With its strong market position, potential for growth in the 5G era, and ongoing cost-saving measures, Vodafone represents an attractive option among the best cheap stocks to buy now in the UK.

4. Centrica (CNA.L)

Centrica is a leading UK-based energy and services company with a focus on providing electricity and gas to consumers and businesses. The company is known for operating under prominent brands, including British Gas, Bord Gáis Energy, and Direct Energy. Centrica has been experiencing a period of transformation as it adapts to the rapidly changing energy landscape, which has led to its current low price.

One of the reasons for Centrica's low price is the increased competition within the energy market, leading to a loss of customers and market share. Additionally, regulatory changes and price caps imposed by the UK government have put pressure on the company's revenues. However, these factors also present opportunities for Centrica to grow and evolve.

Centrica's management has been working on a strategy to cut costs, streamline operations, and increase focus on customer service to regain market share. Moreover, the company is investing in innovative technologies and renewable energy sources, which positions it well for the future energy market. As the global push for clean energy intensifies, Centrica's efforts in this area may pay off, making it a potentially attractive cheap stock to buy now in the UK.

5. Aviva (AV.L)

Aviva is a multinational insurance company headquartered in London, UK. With a presence in more than 16 countries, the company offers a diverse range of insurance products, including life, health, and property insurance, as well as investment and retirement solutions. Despite being one of the largest insurance companies in the UK, Aviva's share price remains relatively low, making it a potentially attractive option for investors seeking cheap stocks.

The current low price of Aviva's stock can be attributed to several factors, such as competitive pressures in the insurance industry, low-interest-rate environments, and previous management issues. However, the company has been working diligently to address these challenges, streamlining its operations, and divesting non-core businesses. Moreover, the appointment of a new CEO in 2020 has brought a renewed focus on growth and profitability.

Aviva's potential for future growth lies in its strategic initiatives, aimed at strengthening its position in core markets and expanding its digital capabilities. As the company continues to simplify its operations and focus on high-growth areas, investors may witness a positive impact on its financial performance. Additionally, with a robust balance sheet and a commitment to delivering shareholder value, Aviva presents an opportunity for investors looking for cheap stocks with potential upside in the UK market.

6. Glencore (GLEN.L)

Glencore is a multinational commodity trading and mining company based in Switzerland, with a significant presence in the UK. It specializes in the production, trading, and marketing of metals, minerals, and energy products. As one of the world's largest diversified natural resource companies, Glencore plays a crucial role in the global economy.

The current low price of Glencore stock can be attributed to various factors, including fluctuations in global commodity prices and political instability in regions where the company operates. Additionally, concerns over environmental regulations and potential legal challenges have contributed to investor caution.

Despite these challenges, Glencore presents potential for future growth. The increasing global demand for electric vehicles, renewable energy, and battery storage is driving the need for the metals and minerals that Glencore produces. Furthermore, the company has taken steps to enhance its environmental, social, and governance (ESG) initiatives, which may attract investors focused on sustainable investments. Glencore's diversified portfolio of assets and its global presence also provide a level of resilience against market volatility. As a result, Glencore stock could be a promising addition to an investor's portfolio, offering both potential growth and exposure to the expanding green economy.

7. Taylor Wimpey (TW.L)

Taylor Wimpey is one of the UK's leading homebuilders, operating mainly in the UK and Spain. The company builds a wide range of properties, from apartments to five-bedroom homes. Despite facing challenges in recent years, Taylor Wimpey has demonstrated resilience and adaptability, making it a potentially attractive option for investors looking for cheap stocks.

Currently, Taylor Wimpey's share price is relatively low due to factors such as the impact of the pandemic on the housing market, as well as uncertainties surrounding Brexit. However, the company has managed to navigate these obstacles and maintain a strong presence in the market, supported by government initiatives like the Help to Buy scheme.

There is potential for future growth as the UK housing market recovers and demand for new homes continues to rise. Additionally, the company has a strong focus on sustainability and environmentally friendly practices, which could contribute to long-term success as the world moves towards greener solutions. As a result, Taylor Wimpey could be an appealing option for investors seeking the best cheap stocks to buy now in the UK.

8. National Express Group (NEX.L)

National Express Group is a leading public transport operator in the UK, providing bus, coach, and rail services throughout the country. The company also operates internationally, with a presence in countries like Spain, Morocco, and the United States. National Express has a track record of providing reliable transportation services and maintaining a strong brand reputation.

Despite the company's solid performance, the stock's price has been affected by the COVID-19 pandemic, which caused a significant decline in public transport usage. As a result, National Express Group's share price has not fully recovered yet, presenting an opportunity for investors seeking cheap stocks with potential for future growth.

There are several factors that indicate National Express Group's potential for future growth. As the world recovers from the pandemic and people return to their regular routines, the demand for public transportation is expected to increase. Additionally, the UK government's push for greener transportation options could lead to further investments in the public transport sector, providing a boost to companies like National Express Group.

In conclusion, National Express Group's current low share price, combined with the expected recovery of the public transport sector and the company's strong brand reputation, make it an attractive cheap stock to buy now in the UK.

9. Barratt Developments (BDEV.L)

Barratt Developments is one of the largest residential property development companies in the United Kingdom. The company is known for building high-quality homes and has a diverse portfolio of properties, including apartments, townhouses, and detached homes. The company has consistently delivered strong financial results, with revenues and profits showing a positive trend over the past few years.

Despite its strong financials, the stock price of Barratt Developments has remained relatively low due to concerns about the UK housing market and the broader economic environment. Some investors are worried about the impact of Brexit on the UK property market, while others are concerned about potential interest rate hikes and their effect on mortgage affordability.

Nevertheless, there are several reasons why Barratt Developments could be a strong candidate for future growth. Firstly, the UK government has set ambitious targets for increasing the number of new homes built each year, which could result in a substantial demand for the services of developers like Barratt. Secondly, the company's solid financials and track record of delivering growth make it a relatively safe investment compared to other cheap stocks.

Additionally, Barratt Developments has been proactive in addressing some of the challenges facing the housing market, such as the need for more affordable and environmentally sustainable homes. The company has made significant investments in modern construction techniques and energy-efficient technologies, which could help to differentiate it from competitors and drive long-term growth.

In conclusion, while the stock price of Barratt Developments has been subdued in recent years, there are several factors that suggest it could be an attractive investment opportunity. By capitalizing on government initiatives and continuing to innovate in the construction space, Barratt Developments may be poised to deliver strong returns for investors.

10. International Consolidated Airlines Group (IAG.L)

International Consolidated Airlines Group is one of the world's largest airline companies, formed through the merger of British Airways and Iberia. The group also includes other well-known airlines such as Aer Lingus and Vueling. The aviation industry has experienced significant turbulence due to the COVID-19 pandemic, and IAG's share price has suffered as a result. However, with the gradual recovery of the global economy and the resurgence of international travel, the company's prospects are starting to look more promising.

One reason for IAG's current low price is the ongoing uncertainty surrounding the aviation industry. The impact of the pandemic, fluctuating travel restrictions, and concerns about the environment have all contributed to investor caution. Nevertheless, the company has taken steps to adapt to the changing landscape, such as cost-cutting measures and fleet modernization. Moreover, IAG has a strong track record in terms of profitability and market share, which bodes well for its future performance.

The potential for future growth lies in the ongoing recovery of the aviation sector and increasing demand for air travel. As vaccination rates continue to rise and travel restrictions are lifted, it is expected that the industry will rebound. Additionally, IAG's diverse portfolio of airlines and strategic partnerships could help it capitalize on emerging markets and new opportunities. With its low share price and promising outlook, International Consolidated Airlines Group is a cheap stock to consider for investors looking for potential growth in the UK market.

Summary

In conclusion, investing in cheap stocks can offer significant potential for growth and is an essential aspect of building a well-rounded portfolio. It is crucial to thoroughly research and evaluate each stock before making an investment decision. The stocks mentioned in this listicle provide a selection of the best cheap stocks to buy now in the UK, with opportunities in various sectors.

Remember that diversification is key to mitigating risks, and investors should aim to spread their investments across different industries and market segments. By taking advantage of the opportunities presented by these undervalued stocks, you can potentially achieve substantial returns in the long run. Keep an eye on these stocks and seize the opportunity to invest in the best cheap stocks to buy now in the UK.

FAQ

What is value investing?

Value investing is essentially an investment strategy where you try to find stocks that are currently trading at a share price that appears to be below the stock's ‘intrinsic value'. So the overarching theme of value investing involves buying shares that you believe the stock market (and other investors) are underestimating. A true underdog story.

Source: freetrade.io

Is There a Downside To Investing in Cheap Stocks?

There's no such thing as a crystal ball on Wall Street. Even stocks that appear undervalued with high growth prospects might not go up in value for any number of reasons.

While your investment in cheap stocks is limited, there is the potential for loss. As with any investment, the best approach is diversification. Don't put all your funds into one stock. Spread out your risk by investing in a variety of stocks and other investment vehicles like

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