I have been looking for cheap UK shares to buy right now for my portfolio. I believe owning cheap shares is an excellent way to build exposure to the UK economic recovery.
These companies may benefit from rising earnings as the economy recovers and from improving investor sentiment. Improving investor sentiment should drive their valuations higher.
Of course, this is not guaranteed. Cheap shares are usually cheap for a reason. Occasionally, they can be suffering from terminal issues.
This is why I prefer to use a diversified approach.
Cheap UK shares
One section of the economy that is currently experiencing explosive growth is the used car market. Second-hand car sales in the UK have more than doubled in the last few months. In the second quarter of the year, the total value of used car sales was up 6.6% on pre-pandemic levels.
As such, I think Vertu Motors and Marshall Motor Holdings are some of the best shares I could buy right now. By acquiring both automotive retailers for my portfolio, I think I can gain exposure to the UK car market without taking on too much single-company risk.
Vertu is trading at a forward price-to-earnings (P/E) ratio of six at the time of writing. Meanwhile, Marshall is selling at a P/E of nine. I think these ratios are desirable. That is why I would buy both companies today.
Property shares to buy right now
Another sector I would target when looking for cheap UK shares is the real estate sector. A couple of names in this sector immediately stand out.
British Land and Great Portland Estates are both real estate investment trusts (REITs), but they have different objectives. Great Portland’s property portfolio is based in and around central London. British Land owns a selection of retail and office properties around the country.
The outlook for the commercial property market is currently incredibly uncertain. This has piled pressure on commercial property prices, and as a result, the share prices of REITs.
However, as the economy continues to reopen, I believe these giant landlords should see an increase in rent collection and demand from potential occupies. With both UK shares trading at or below their recently reported book value, I think there is an opportunity here.
The one considerable risk facing both groups, property and automotive retailing, is another lockdown. This could set back plans to return to offices and force stores to close once again. With people forced to stay at home, there could also be a drop-off in demand for second-hand vehicles.
In both of these situations, I think both groups of companies outlined above would only become cheaper.
Still, even after taking this risk into account, I continue to believe these are some of the best UK shares for me to buy now. I would purchase both groups to build a diversified portfolio of stocks positioned to profit from the recovery.
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Rupert Hargreaves owns shares of British Land Co and Great Portland Estates. The Motley Fool UK has recommended British Land Co 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.