I’m searching for the best cheap UK shares to add to my stocks portfolio for 2022. Here are three top-quality companies on my shopping shortlist today.
A dirt-cheap mining share
I’m seriously considering buying Anglo Asian Mining (LSE: AAZ) today. This is because I think the price outlook for the copper and gold it produces is extremely favourable. I expect a backdrop of runaway inflation to power the asking prices for both the metals it produces. And for copper specifically, I reckon values will climb as demand for electric vehicles and renewable energy technology grows.
However, mining shares like this can be risky propositions. The complex nature of their operations can result in huge, unexpected costs and lost revenues related to output issues. Still, it’s my opinion that Anglo Asian’s low rating reflects this danger. The business — which operates mining assets in Azerbaijan — trades on a P/E ratio of just 9 times for 2022.
A bargain from the FTSE 100
Meanwhile, BAE Systems (LSE: BA) offers the sort of all-round value I find hard to ignore. For 2022, the defence contractor trades on a price-to-earnings (P/E) ratio of 11 times. And its 4.5% dividend yield beats the broader average for FTSE 100 shares by a full percentage point.
Unfortunately, fighting wars is a constant throughout human history. This means the products and systems it manufactures will always remain in high demand. The Footsie firm is a market leader across a broad range of segments, making it a critical supplier to the US and UK militaries.
BAE Systems also has exposure to some fast-growing emerging markets where arms spending is rising rapidly. Its Australian division gives it a leaping off point into Asia Pacific, a territory where fears over Chinese expansionism are steadily growing.
BAE Systems also has an excellent reputation for quality and innovation. This gives me confidence that it should remain a major industry player for years to come. But I’m aware that previous victories are no guarantee of future success, and a high-profile failure of its systems could prove devastating for future business.
Making money with UK property
Residential Secure Income (LSE: RESI) also provides plenty of attention-grabbing value today. Its dividend yield clocks in at a plump 5.2% for the fiscal year to September 2022. And its price-to-earnings growth (PEG) multiple for next year comes in at 0.7. A reading below 1 suggests a stock could be undervalued.
The residential rentals market can still be highly lucrative. But rather than doing this through buy-to-let, I’d buy UK shares like Residential Secure Income. This is much simpler and less expensive than if I were to become a landlord.
Rents in Britain continue to go from strength to strength. Latest data from estate agency Hamptons showed tenant costs for four-bedroom properties soar 10.6% year-on-year in October. While the going remains good for Residential Secure Income, remember that rent growth could cool if Britain’s massive shortage of rental homes begins to improve.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
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