5 cheap FTSE shares that I believe are set for big growth
The Motley Fool
Published Jul 10, 2020 07:17
Updated Jul 10, 2020 07:40
5 cheap FTSE shares that I believe are set for big growth
UK stocks have had a good run over the last few months. Since the stock market began rebounding from the Covid-19 sell-off in late March, many stocks have risen 50%, 100%, or more.
There is still plenty of value to be found within the market, however. Here’s a look at five exciting FTSE small-cap stocks that I think look cheap right now.
Cheap FTSE small-cap stocks One FTSE stock that stands out to me as cheap at the moment is Clipper Logistics. It’s an innovative logistics company that offers a wide range of services, including warehousing, delivery, and returns management. Its customers include the likes of ASOS (LON:ASOS), Asda, and PrettyLittleThing.
Clipper has grown rapidly in recent years (three-year revenue growth of 60%) and I see the potential for plenty of growth ahead. Recently, the company said it expects to benefit from evolving trends in the retail sector as Covid-19 accelerates the shift to e-commerce. The stock is not expensive, however. Currently, CLG shares trade on a forward-looking P/E ratio of 17. I think that’s an attractive valuation.
Operating in a similar field is Urban Logistics. It’s a real estate company that invests in urban warehouses. These are designed to help businesses operate their distribution networks smoothly.
Urban Logistics has grown its top line by nearly 450% over the last three years, and this year, analysts expect top-line growth of 67%. You don’t have to pay a premium for this growth though. Currently, SHED shares trade on a forward-looking P/E ratio of just 18.3.
Another FTSE company that could benefit from the growth of online shopping is Macfarlane. It’s a leading packaging distributor that serves more than 15,000 businesses across the UK, Europe, and the USA. Its customers include Argos, Acer and Selfridges.
Macfarlane supports companies in a wide range of growing industries including internet retail, consumer goods and healthcare. So I expect it to generate solid growth in the years ahead. The stock currently trades on a forward P/E ratio of just 8.9, which I think is a steal.
Turning to the financial sector, one stock that stands out to me as a bargain is AFH Financial Group. It’s an under-the-radar wealth management company that has assets under management of around £6bn.
AFH has grown at an impressive rate over the last five years, registering top-line growth of nearly 400%. Analysts expect the FTSE company to continue growing at a solid clip in the years ahead. The stock’s valuation doesn’t reflect this growth, however. Currently, the shares can be picked up on a forward-looking P/E ratio of just 10.9. I see that as top value.
Finally, I also like the look of Alpha FX right now. It’s an innovative FTSE AIM 100 company that provides foreign exchange (FX) hedging services to small- and medium-sized businesses.
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Alpha FX is a highly profitable company that has grown at a phenomenal rate recently. Over the last three years, revenue has increased by 320%. I expect demand for its services to remain strong going forward.
AFX shares currently trade on a forward-looking P/E ratio of 21.4 using next year’s EPS forecast. That’s an attractive valuation, in my view.
The post 5 cheap FTSE shares that I believe are set for big growth appeared first on The Motley Fool UK.
Edward Sheldon owns shares in Clipper Logistics, ASOS, and Alpha FX. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended Alpha FX and Clipper Logistics. 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
First published on The Motley Fool
Written By: The Motley Fool
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