Buying dirt-cheap UK shares today could be a sound means of benefitting from a likely stock market recovery. After all, the stock market has always bounced back from its declines to post new record highs.
Since it continues to trade below its 2020 starting price, there may be opportunities to capitalise on its likely rally over the coming years.
With that in mind, here are five FTSE 350 shares that could offer good value for money. Over time, they could help an investor to make a million.
Opportunities to capitalise on a stock market recovery
Many dirt-cheap UK shares that could benefit the most from a stock market recovery operate in sectors that face difficult near-term outlooks. For example, British Land faces weak demand for office and retail space in a tough economic period. Meanwhile, ITV has experienced a fall in demand for TV advertising as business and consumer confidence has deteriorated.
However, both companies appear to have solid financial positions and the right strategies to adapt to changing operating environments. Moreover, British Land trades on a price-to-book (P/B) ratio of 0.7, while ITV has a price-to-earnings (P/E) ratio of around 10.
These figures suggest they offer wide margins of safety. So that means investors may be undervaluing their capacity to deliver share price growth as the stock market recovers from the 2020 crash.
Dirt-cheap UK shares in a range of sectors
Retailers such as Marks & Spencer and Kingfisher may be relatively attractive dirt-cheap UK shares to own in a stock market recovery. The two companies have shifted their focus towards online retailing in the past couple of years.
For Kingfisher, this appears to be paying off. It’s recorded strong sales growth in recent months. For Marks & Spencer, the growth opportunities provided by its tie-up with Ocado could be significant in the coming years.
Kingfisher and M&S currently trade on forward P/E ratios of around 11. This suggests they may offer good value for money ahead of a likely economic recovery in the long run.
Similarly, housebuilder Bellway could benefit from an improving economic outlook. A period of low interest rates may encourage higher demand for new homes through improving their affordability.
The company’s financial position suggests it can overcome short-term threats facing a wide range of dirt-cheap UK shares to post improving performance in a long-term stock market recovery.
Making a million
Dirt-cheap UK shares could be among those companies that benefit the most from a stock market recovery. Their low prices may mean they’ve greater scope to generate capital growth in the coming years.
Even if an investor matches the historic annual total returns of the FTSE 100 of 8%, investing £750 per month for 30 years would produce a £1m portfolio. However, through buying undervalued stocks today, a higher return may be possible. And that could reduce the amount of time it takes to generate a seven-figure portfolio.
