Stock market rally: 2 cheap UK shares I’d buy for the 2021 bull market

Royston Wild
·3-min read
Private investor buying UK shares at home
Private investor buying UK shares at home

Market confidence is bubbling nicely in early December trade as hopes of a Covid-19 vaccine improve. The FTSE 100 and FTSE 250 are continuing to claw back ground lost during the earlier stock market crash. And I’m quietly optimistic that we could be on the tip of a new bull market for UK shares.

I’ve kept the faith and continued buying British stocks in 2020 despite the uncertain economic environment. And I plan to keep building my Stocks and Shares ISA as the outlook for corporate profits tentatively improves. Here are a couple more cheap UK shares I’m thinking of buying for the stock market recovery:

1) Tate & Lyle

FTSE 250 colossus Tate and Lyle (LSE: TATE) is a brilliant way to hedge one’s bets in the current climate. A breakthrough on the Covid-19 vaccine front — and a subsequent strong and sustained recovery in the global economy — will allow the food ingredients giant to thrive on improving consumer spending. However, the essential nature of its product ranges means that its profits should remain strong even if the coronavirus crisis drags on in 2021.

I’m also encouraged by recent acquisition activity the UK company has executed to boost long-term profits growth. It boosted its position in the stevia sweetener market by buying Sweet Green Fields for an undisclosed sum. The move will boosts Tate & Lyle’s position in the gigantic Asia Pacific market and brings a fully integrated supply chain under its umbrella. It adds more product ranges to the company’s top class ingredients and foods stable too.

Today Tate & Lyle trades on a forward price-to-earnings (P/E) ratio of 12 times. The foodie carries a mighty 4.8% dividend yield, too. These figures make it a terrific all-round UK share for value chasers.

2) 4Imprint Group

Promotional products manufacturer 4Imprint Group (LSE: FOUR) is a top stock for even the most nervous of investors. As the boffins over at Edison recently commented, this UK share “retains a strong, cash positive balance sheet” despite the crushing impact of Covid-19 while is also has “low fixed costs and capital requirements”.

But enough of the bearish stuff. I reckon profits at 4Imprint will thrive during the economic recovery. This UK share might also be among the first to bounce back in 2021 as marketing spending by business tends to rebound during the early part of the economic cycle. The FTSE 250 company can expect demand for its branded pens, umbrellas, notepads, and other paraphernalia to fly should a vaccine be rolled out in the weeks and months ahead.

Like Tate & Lyle, 4Imprint isn’t just a top buy for any 2021 stock market recovery. As Edison’s analysts continue, the business has “a market-leading position” in a hugely fragmented sector. And it has considerable balance sheet strength to embark on fresh acquisition activity to bolster future earnings growth too. Today this UK share trades on a forward price-to-earnings growth (PEG) ratio of 0.1, making it a bargain by anyone’s standards.

The post Stock market rally: 2 cheap UK shares I’d buy for the 2021 bull market appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended 4imprint Group. 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.

Motley Fool UK 2020