Looking for cheap shares to buy in October? 3 things to remember!

Like a lot of people, I have been looking for shares to buy for my portfolio this October.

But October has historically been rather a volatile month in the stock market. On top of that, quite a few shares on both sides of the pond currently look overpriced to me.

So, as I hunt for bargain shares to buy in coming weeks, here are three things I am trying to keep in mind.

Value creation means paying less for more

Just because a share is cheaper to buy than it used to be does not necessarily mean that it is cheap.

Maybe the business has got worse. Or perhaps the share used to be overpriced and, after a price fall, is now still overpriced — just less so than before.

Instead, I ask myself why a share looks like good value. In other words, is the price I am paying now less than I expect the share to be worth in future?

When making that assessment, I do not just think about the potential for share price growth. I also take into account dividends – and the cost to me of tying up my money for however long I own the share.

As billionaire Warren Buffett says, “price is what you pay, value is what you get”.

Businesses can change their performance exponentially, not just incrementally

When looking for cheap shares to buy, I often pay a lot of attention to a company’s price-to-earnings (P/E) ratio.

But over-emphasising this sometimes leads me into one of two related, but different, traps.

The first is what is known as a value trap. This can happen if I think a share looks like offering good value, even if its earnings decline a bit. In fact, though, it is priced as it is because other investors realise sooner than I do that earnings could fall off a cliff.

Sometimes, conversely, I think a company’s P/E ratio is too high. Nvidia right now is an example: it is on my list of shares to buy, but only if I can buy it at a lower price.

But, as Nvidia has demonstrated, some companies can grow their earnings in leaps not just small steps. So what seems like an overpriced share can actually turn out to be a bargain over the course of time.

A stock market is a market of stocks

With market indexes riding high, it may seem that shares are expensive. But, no matter what the stock market does, some shares are cheap and some are expensive.

For example, I have been building a small stake in discount retailer B&M European Value (LSE: BME) this year.

Its share price has tumbled 27% so far in 2025, even while the FTSE 250 index of which it is a constituent member has moved up by 7%.

Investors seem to be concerned about weak sales in the company’s fast-moving consumer goods shelves.

That could point to wider problems at the chain, such as a lack of price competitiveness. For a discount retailer, that could lead shoppers to look elsewhere.

But B&M is solidly profitable, remains in growth mode (the most recent quarter saw sales revenues grow 4% year on year) and to me looks like it is underpriced.

Looking to buy bargain shares for my portfolio, it caught my eye.

The post Looking for cheap shares to buy in October? 3 things to remember! appeared first on The Motley Fool UK.

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• 4 shares I bought for my SIPP this month
• With markets riding high, could now really be the time to start buying shares?
• FTSE 100 shares: are we in for a rough ride?    
• How much do you need to invest in dividend shares to aim for a £500 monthly passive income?
• UK shares: is there a reckoning coming?

C Ruane has positions in B&M European Value and Journeo. The Motley Fool UK has recommended B&M European Value. 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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