2 cheap UK shares (including two FTSE 100 stocks) I’d buy

Private investor buying UK shares at home

Taylor Wimpey’s (LSE: TW) a blue-chip UK share I already own in my Stocks and Shares ISA. And at current prices, I’m thinking of snapping up some more.

Analysts think earnings at the housebuilder will rise 164% in 2021. This creates an ultra-low forward price-to-earnings growth (PEG) multiple of 0.1. Furthermore, this FTSE 100 firm sports a market-beating 4.8% dividend yield too.

Britain’s extreme homes crunch has worsened of late as the Stamp Duty holiday supercharged buyer demand. But while the tax is creeping back, analysts still think Taylor Wimpey will continue to deliver strong profits growth.

Another 11% earnings rise is on the cards for 2022, current forecasts suggest. I’m inclined to share this bullish view today as a favourable blend of low interest rates and government support for first-time buyers look set to persist.

A word of warning however. Labour shortages are pushing costs up across the construction sector, and a recent study from recruitment website Indeed showed wages here soar 6.7% between February and July. This could become a longstanding problem at Taylor Wimpey and other UK construction shares in the post-Brexit environment.

Another cheap UK share on my radar

Trifast (LSE: TRI) is another cheap UK share City brokers expect to enjoy explosive earnings growth. This is perhaps no surprise as this small-cap stock manufactures screws, bolts and other fastenings that help keep a broad array of consumer goods and industrial products tied together. It’s therefore well-placed to ride the current economic recovery.

The number crunchers think Trifast’s earnings will soar 75% in the financial year to March 2022. This means the engineer trades on a rock-bottom forward PEG ratio of 0.3. A reminder that a reading below 1 suggests a stock could be undervalued at current prices.

Screen of price moves in the FTSE 100

It’s possible these estimates could be swept off course if supply chain problems in Trifast’s end markets persist however. For example, auto production in Britain has slumped to its lowest since 1956 because of massive parts shortages and worker absences. The UK share sources around 35% of revenues from light and heavy vehicle production.

A FTSE 100 share I’d also buy

I’m also considering buying Polymetal International (LSE: POLY) due to its exceptional value. This UK mining share trades on a forward price-to-earnings (P/E) ratio of around 9 times and carries a mighty 7% dividend yield for 2021.

In fact, as a long-term investor, recent news last week has boosted my appetite for the FTSE 100 company. While the business has hiked its capital expenditure target to $675m-$725m (from $560m previously), this higher estimate also reflects work to accelerate development of its Prognoz and Nezhda projects to capitalise on bright silver prices.

I think precious metal prices will remain strong as an environment of increasing inflation and extreme geopolitical tension will likely persist. And UK shares like Polymetal are well-placed to exploit this phenomenon.

Though, of course, there’s always a danger that gold and silver prices could also reverse. That could be due to a variety of macroeconomic and geopolitical issues (like a faster-than-expected Covid-19 economic recovery).

The post 2 cheap UK shares (including two FTSE 100 stocks) I’d buy appeared first on The Motley Fool UK.

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Royston Wild owns shares of Taylor Wimpey. 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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