Stock market crash: UK shares that I think are too cheap to ignore

Even months after the stock market crash there are still opportunities to pick up cheap shares, says Andy Ross.

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The recovery from this year’s earlier stock market crash has been a slow process for most shares. Now even US tech shares are falling. Closer to home, I think the crash means there are UK shares that are very cheap.

Lagging behind its rivals but with potential 

One is the big pharma group GlaxoSmithKline (LSE: GSK), which is involved in finding a vaccine for Covid-19. For me that’s not the reason to invest though. I find the possibility of a R&D-led turnaround, and the potential that has to make GlaxoSmithKline a high-yielding, dividend growth share, to be very appealing.

Progress towards on path has been slower than some may like. Rival AstraZeneca is much further ahead. But under CEO Emma Walmsley, it’s progressing. The group will spin out its consumer healthcare business within the next three years. It has also spent money on acquiring TESARO, for example, to beef up its oncology portfolio.

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I believe for long-term investors, if Glaxo can come anywhere close to replicating AstraZeneca’s R&D success, then the shares are far too cheap. AstraZeneca has a trailing price-to-earnings multiple of around 100, putting into perspective just how cheap Glaxo shares are. 

The shares are cheaper even now, after falling sharply recently. They trade on a P/E of under 12 which to me represents good value compared to other pharma companies and the market more generally.

A cheap share hit hard by the stock market crash

Barratt Developments (LSE: BDEV) could face some short-term pressures from regulatory action concerning leaseholds. It’s unclear as yet what action that could lead to, although the issue itself isn’t particularly new.

More broadly the government has been supporting the sector. In addition to the Stamp Duty cut, Help to Buy is still supporting sales and there are rumours it could be extended even further.

Barratt shares were cheap even before the pandemic because of Brexit and probably because of the possible ending of Help to Buy in 2021. Now the shares are even cheaper as the pandemic closed down the industry earlier this year. So the housebuilders are still playing catchup. They have mostly still to reintroduce their dividends which were cut in response to Covid-19. 

I think the shares are a potentially profitable investment because of their cheapness – they trade on a P/E of 14 – and the potential for the dividend to be reintroduced. Rival Persimmon has already announced the resumption of payments, albeit at a lower rate. Then thirdly, the high levels of cash held by Barratt and its rivals will see them through this period of lower sales.

When I look at GlaxoSmithKline and Barratt Developments, I see two shares that are great value after the stock market crash. To me they are too cheap to ignore, and could make investors money in the future both from share price growth and from dividends.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

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Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andy Ross owns shares in AstraZeneca and Persimmon. The Motley Fool UK has recommended GlaxoSmithKline. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

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