Are these the best cheap shares to watch in March 2024?

The Bank of England’s Monetary Policy kept interest rates at 5.25% in February despite evidence of price inflation peaking. Bank of England Governor Andrew Bailey says the MPC needs to see more evidence of inflation falling further before it will move to cut rates. Nevertheless, although some companies are starting to see a fall in inflationary costs, the cost of living crisis continues as many consumers have yet to see price cuts filter through to their pockets and mortgage payments remain high for many.

Meanwhile, the prospect of war is stepping up with the recent attacks by Iran-backed Houthis and US and UK strikes on targets in Syria and Iraq. Two major elections also loom this year – the US Presidential election and the UK general election, likely to be in November.

With these themes in mind, here are some of the best cheap shares we think may be worth watching. They have been selected for recent market news.

Always do your own research. Past performance is not a guide to future performance.

Best cheap stocks to watch in March 2024

1. JD Wetherspoon

2. Premier Foods

3. Apple

4. Babcock

5. Ashtead

JD Wetherspoon (LON:JDW)

JD Wetherspoon has weathered the storm of last year’s spike in energy prices and is recovering well. The budget high street pub chain recently unveiled an upbeat trading statement, with like-for-like sales in the 25 weeks to 21 January up 10.1% compared to the same period. Bar sales rose by 11.8%, food by 7.9% and revenues from fruit machines by 10.4%. Meanwhile, revenues from hotel rooms rose by 3.1% and total sales by 8.4% in the year to date.

Chief executive Tim Martin continued his customary complaints about the UK tax and VAT regime for pubs Vis a Vis that of the supermarkets and inflationary costs. However, Wetherspoon’s outlets continue to offer value for money to customers amid the cost of living crisis. Shares in the company are up an impressive 86% this year to 830p, but continue to trade well off their three year highs of 1414p, last seen in May 2021.

Premier Foods (LON:PFD)

Food producer Premier Food had a good autumn and Christmas period, unveiling a strong set of third quarter results in January with total revenues to 30th December up 14.4% to £353 million. Branded sales increased by 12.7%, while sales of sweet treats rose by 21.3% over the period – boosted by sales of its Cadbury cakes. International sales were also strong, up 11%, while sales from new categories increased by an impressive 108%. The company is also cutting prices across its products in the fourth quarter.

In its November trading update Premier increased its earnings guidance for its trading profits by 10% for the full year and maintained this in its latest update, saying it was “well on track” to deliver.

The shares are up 22% this year but, on a forward price earnings ratio of just 10, the rating is undemanding.

Apple (NSQ:AAPL)

Apple recently disappointed investors by revealing a slowdown in its Chinese markets. The company missed analysts’ forecasts for sales of its phones there by about $3 billion during the fourth quarter, generating sales of $20 billion. Foldable phones are becoming increasingly popular in Asian markets and Apple does not currently have a foldable product.

Nevertheless, the iPhone giant generated $40 billion in free cash flow during the fourth quarter alone and returned $27 billion to shareholders. Quarterly revenue came in at $119.6 billion, up 2% on the same period last year, and quarterly earnings per diluted share increased by 16% to $2.18. Meanwhile, services revenue hit an all-time high - 11% to $23.12 billion in sales. This business area includes Apple TV+, music, the App Store and iCloud storage and the App Store.

However, this dip could mean the shares are worth watching, given that at $185 they are now trading off their year high of $199.66. Analysts at broker Wolfe Research recently upgraded their price target on the shares from $185 to $200.

Babcock (LON:BAB)

Defence contractor Babcock recently paid its first dividend payment for four years thanks to a successful turnaround programme. The company is helping train Ukrainian soldiers for the Ministry of Defence, is benefiting from investment in submarines through the Aukus Pact and is also building a new Type 31 frigate for the Royal Navy.

Shares in the company are up 48% this year, but are likely to benefit from the continued geopolitical uncertainty, with the ongoing Israel/Hamas war, tensions in the South China Sea and recent US strikes on targets in Iraq and Syria.

The shares trade on a forward rating of around 10 and are priced at a discount to rivals Chemring and BAE Systems. Analysts at broker Barclays recently upgraded their price target on the shares from 325p to 529p.

Ashtead (LON:AHT)

Shares in equipment hire firm Ashtead were hit by the company’s profit warning in November, which said earnings before interest, tax, depreciation and amortisation (EBIT) would be 2% to 3% lower than expected for the full year. The company was negatively affected by the Hollywood writers and actors’ strike, which halted production of numerous TV shows and films and meant rentals of its lighting and camera equipment were reduced.

Ashtead has also seen a drop in equipment hire due to the quieter hurricane season – its US arm Sunbelt Rentals rents out equipment to the construction industry for post-disaster clean-up. The shares have fallen by 7% this year to 5,344p but analysts think this was an unfortunate one-off blip. Ashtead is expected to continue to benefit from increased infrastructure spending around the world – especially in the UK and US, following President Biden’s Inflation Reduction Act. Certainly, half-year results posted in December were strong, with group revenue up 16% to $5.6 billion and pre-tax profits up 5% to $1.3 billion.

While analysts at broker Barclays lowered their target on the shares from 6,300p in November, they still think the shares could reach 6,000p.

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