Best cheap stocks to buy in March 2023
What are the best value shares to buy in March 2023?
The economic doom and gloom continues this month as the International Monetary Fund slashed its growth forecasts for the UK. Disappointingly, Britain was the only G7 nation to see its growth estimates cut, with the organisation now forecasting that the UK’s economy will contract by 0.6% this year. The IMF previously pencilled in economic growth of 0.3% for Britain in 2023. It blamed the spike in gas prices caused by the Ukraine war and a shortage of workers in the UK for the growth revisions.
"All these factors taken together lead to a fairly sharp retrenchment of activity in 2023," said Pierre-Olivier Gourinchas, the IMF's chief economist.
So, given this tough backdrop for investors, what are the best cheap shares to buy in March this year? Here are some suggestions.
Pets at Home raises its earnings guidance
Shares in the pet provisions provider are down 16% over the past year after the Covid-related boost to pet-related sales ran out of steam post the pandemic easing. However, the shares rose by 8% this week after the company released an upbeat trading statement. Pets at Home has increased its earnings guidance on the basis of record third-quarter consumer sales, which grew by 9% over the period to £434.7 million. Retail revenues also increased by 8% in the quarter, while group revenues overall were up 8.8% to £347.5 million. Meanwhile, the veterinary practice side generated over £10 million a week in sales for the first time, with revenues up by 18%.
As such, the company says, given that the strong trading has continued into the fourth-quarter, it now expects underlying profit before tax to come in at the upper end of forecasts of £126 million to £136 million. This is against previous guidance given of profits of around £131 million.
Brits love their pets and, while the outlook for the economy may be rocky, consumer spending on pets is likely to remain reasonably resilient. Pets at Home has hedged its dollar requirements for the foreseeable future and says shipping rates are easing, although energy costs remain a concern.
At 357p, the shares are some way off their three-year highs of 509.5p. Analysts at Berenberg Bank think the shares could hit 370p, while those at Peel Hunt have a price target of 475p. Meanwhile, a re-rating of the shares looks likely.
YouGov offers growth potential
Research and survey firm YouGov has seen its shares decline by 19% over the last 12 months. Shares in the company, which produces in-depth research programmes and polls for clients including governments and large corporations, are highly rated but offer decent growth prospects. Indeed, revenues for the recent full-year rose by 31% to £221.1 million, while adjusted profit before tax increased by 11% to £34.7 million.
The company recently posted an upbeat trading statement ahead of the results due in March. YouGov said it had enjoyed a “resilient” first-half of the year despite the economic uncertainty, thanks to customers spending on strategic market research programmes. As such, the company is hopeful of gaining further multi-year contracts and trackers with clients for its custom research work. Indeed, the pollster has been relatively protected from the difficulties of the Covid-19 pandemic and economic slowdown as most of its work and operations take place online.
YouGov is seeing strong demand in the US, where it says substantial market opportunities are accelerating in areas such as technology. Meanwhile, trading in the UK has also improved despite the looming recession and its sales pipeline is strong. As such, the company is sticking with its current earnings guidance and says it is confident of delivering revenue growth as forecast and growing margins. Additionally, the recent bolt-on acquisition of Swiss firm Link Marketing Services could boost sales by 10%, according to analysts at Berenberg Bank.
At 965p, the shares are some way off their three-year highs of 1,600p last seen in December 2021. Analysts at broker Shore Capital forecast they could reach 1,640p. Half-year results are due on the 21st March.
Tate & Lyle showing resilience
Tate & Lyle is almost unrecognisable now compared to its past form as a sugar producer and distributor. The company sold off its sugar business and now makes sugar-free sweeteners, as well as other products that help make food, such as desserts, healthier and last longer.
At 757.8p, the shares have fallen some way from their three-year highs of 946.3p in April 2021 and are down 8% in the past year. However, trading remains buoyant and the company has successfully managed to pass on price increases to its customers, despite the current tough economic conditions. In its recent January trading statement, Tate & Lyle said that it had grown sales in its food and beverage division by 19% in the third-quarter and double-digit growth in its European, Middle Eastern and African markets, as well as in Latin America. Last year the food producer sold off the bulk of its holding in food ingredient provider Primient.
However, stronger profits in its food and beverage side are expected to offset lower profits from Primient. As such, it has maintained its earnings guidance for the full-year. The company is also holding a capital markets day on the 8th February, which, if successful, could lead to broker upgrades. Analysts at broker Berenberg have a buy rating on the shares and think they could reach 935p.
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