Investing in cheap UK shares after the market crash may not be an obvious decision in the eyes of some investors. After all, the uncertain economic outlook may make other assets such as Bitcoin, gold or buy-to-let property seem more appealing due to their stronger recent performances.
However, buying a selection of undervalued British stocks could be a more profitable move in the long run. Their low prices and recovery potential could allow them to outperform more popular assets over the long run.
With that in mind, here are two FTSE 100 stocks that appear to offer good value for money. They could be worth buying today.
A buying opportunity among cheap UK shares
Tesco (LSE: TSCO) appears to offer good value for money relative to other cheap UK shares. The company’s forward price-to-earnings (P/E) ratio of 13.5 suggests that it offers a wide margin of safety.
The retailer’s recent first-quarter trading update highlighted growing demand for its online delivery service. Online sales grew by 48.5%, which suggests that its past investment in e-commerce could pay off as consumers switch to shopping from home. Furthermore, its convenience store sales growth of almost 10% suggests that it is in a good position to benefit from wider changes to consumer shopping habits.
Tesco is due to yield 4.2% next year from a dividend that is set to be covered 1.8 times by net profit. This highlights its income investing appeal, which could increase demand for its shares and help to push their price upwards.
An improving financial outlook
Kingfisher (LSE: KGF) is another FTSE 100 retailer that could be worth buying alongside other cheap UK shares. The company’s recent second-quarter trading update highlighted rising demand for its products. Its sales increased by 21.8% on a like-for-like basis, which could continue as consumers shift their spending towards e-commerce channels.
The company is also seeking to improve its operational performance. This involves becoming more efficient, which could positively impact on its financial prospects. This is in tandem with online investment, which could position the business for further growth as consumer spending habits evolve.
Looking ahead, Kingfisher is forecast to post a 5% rise in earnings this year. Its forward P/E ratio of 13.9 suggests that it offers a margin of safety relative to other cheap UK shares. As such, now could be the right time to buy a slice of it for the long run.
Although cheap UK shares may face uncertain near-term futures, their long-term prospects appear to be bright. Therefore, now could be the right time to build a portfolio of diverse shares that includes Tesco and Kingfisher.
Due to the high prices of gold and buy-to-let properties, as well as the high risks linked to buying Bitcoin, a stocks portfolio could make a more positive impact on your financial prospects in the coming years.
Peter Stephens owns shares of Tesco. The Motley Fool UK has recommended Tesco. 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.