Stock market

2 Fantastic Cheap Shares Investors Should Consider Buying

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In my opinion, the economic uncertainty has killed the opportunity to buy quality cheap stocks.

I believe investors should consider snapping up two picks. Barratt Developments (LSE: BDEV ) and National Grid (LSE: NG.)

Here’s why!

Barratt Developments

The UK’s largest residential housing developer looks like a no-brainer opportunity to me.

Despite a tough 12-month period economically, shares are up 6%. At this time last year, they were trading at 473p compared to current levels of 502p.

I will point out the obvious, which is the current difficult housing market brought on by high interest rates and inflation. Because of these problems, Barratt’s completions, sales, and share price have all fallen. Naturally, I am concerned that efficiency and profitability may decline if this trend continues for some time.

However, the future looks bright if you ask me. I believe Barratt has the tools, brand power, and presence to navigate the current stormy waters and capitalize later down the line. My belief is that there is a chronic housing shortage in the UK, and demand for supply is increasing. Once the short-term economic pressures are over, Berat can be primed to take advantage and increase efficiency and profitability.

Currently, the shares look very attractive at a price-to-earnings ratio of just over seven. In addition, the business appears prepared for the current turbulence and has the financial strength to reward investors. The dividend yield is an attractive 5.5%. However, I understand that profits are not guaranteed.

In my view, Barratt is a stock worth considering for long-term growth and profitability.

National Grid

When it comes to National Grid, the firm has a monopoly on operations in the UK as well as its defense capability. It’s the only game in town, and runs one of the most important pieces of infrastructure in the country, ensuring we all get our energy.

National Grid’s shares have fallen 17% over the 12-month period to their current level of 832p from 1,011p this time last year.

The recent sharp decline is due to a new rights issue that has pushed down the share price. However, I see this as an opportunity for investors to buy cheap shares. Currently, the shares trade at a price-to-earnings ratio of just 13, which has not been seen in some time.

From a bullish perspective, energy is essential to all, hence the firm’s defensive capability. Next, with its monopoly, it can generate stable income and reward investors. A dividend yield of 5.2% is attractive to support bag dividends and grow wealth.

Despite my clear bullish stance, there are two risks I must mention. First, the government can intervene and freeze the level of payment, damaging the passive income that I gravitate towards.

Next, the green revolution is happening, and the investment to update and maintain such a large and important piece of infrastructure may reduce some of the profits, and hurt returns for investors.

Overall, the rewards outweigh the risks in my opinion. Being the only player in the game, and providing essential service is a game changer, and one of the reasons why I will happily personally buy shares of National Grid the next time I am able.

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