I’d be forgiven for thinking FTSE 100 stocks might perform well today after UK GDP growth came in higher than expected at 0.5% for May.
But that hasn’t happened and the benchmark index fell again. You see, there’s a host of factors influencing UK stocks, and let’s face it, the index hasn’t been overwhelmingly popular since the Brexit vote.
However, I’m confident that the Footsie will recover eventually and for me, now’s a great time to buy stocks with particularly attractive valuations. Here are three cheap stocks I’d buy today.
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Persimmon
Persimmon (LSE:PSN) shares keep falling this year as investors worry about the near-term challenges facing housebuilders.
It actually disappointed in its recent update. Revenue was above expectations but housing deliveries fell on supply issues.
However, there are several reasons why I’m positive on Persimmon. Firstly, it has been less impacted by the cladding crisis than other housebuilders. The developer plans to spend £75m on recladding homes in the UK. This is less than 10% of 2021 pre-tax profits.
I’m also bullish on long-term demand for property. There might be a fall in demand in the near term as interest rates rise, but the supply of housing has continuously been below demand for decades. I don’t see this changing.
It currently trades with a price-to-earnings (P/E) ratio of 7.2.
Hargreaves Lansdown
Hargreaves Lansdown (LSE:HL) shares have tanked over the past year. In fact, they’re down 50% over the past 12 months.
There are certainly some headwinds. A cost of living crisis means that Britons will likely have less money to invest and the current volatility is probably putting some investors off. 2022 has been no bull run.
With restaurants, shops, cinemas and the economy as a whole open again, the conditions that boosted the firm’s growth during the pandemic are well and truly over.
But in the long run, I’m backing Hargreaves Lansdown’s market-leading platform to outperform its peers. The platform provides newcomers with all the information they need to invest, while giving mature investors the support they require.
It’s also looking pretty cheap right now, considering its growth potential, with a P/E ratio of 13.
Rolls-Royce
Rolls-Royce (LSE:RR) is trading for less than 90p amid concerns over its debt and the recovery of the civil aviation industry. That’s Rolls-Royce’s biggest segment and this took a massive hit during the pandemic.
But I think things are looking up for the British engineering firm. It was recently upgraded by Morgan Stanley to “overweight” with the broker suggesting that the earnings recovery is much closer than the market has priced in.
The aviation sector is close to pre-pandemic levels and the defence business, Rolls-Royce’s second-biggest segment, is supposedly booming on the back of global spending increases following Russia’s invasion of Ukraine.
Rolls is shedding business units and hopefully, this will see debt reaching more manageable levels.
I’ve already bought Rolls-Royce stock, but would buy more at the current price.
