2 Cheap UK Stocks I Think Investors Should Consider Adding To Their Portfolios This Month!

British stocks show no sign of slowing down. FTSE 100 The Consumer Price Index (CPI) has made a spectacular recovery since it plunged to 5,190.8 points at the start of the pandemic. It has reached new highs this year and I think it could still do much more.

That’s because many UK-listed companies, despite the recent recovery, still look undervalued. Investor sentiment towards the domestic stock market appears to be improving. Against this backdrop, I think it’s time to go shopping.

This is not to say that there will be no volatility. Interest rate cuts and inflation will continue to have a big influence on market performance.

But there are plenty of cheap buying opportunities to explore right now. Here are two that investors should consider. If I had the cash, I would buy them today.

Marks and Spencer

Shares in the retail giant Marks and Spencer (LSE: MKS) has performed decently so far this year after a strong 2023. Year-to-date, they are up 5.4%.

However, after falling 5.9% over the past month, I think this could be a buying opportunity. Its shares now trade at 14.1 times earnings. In my eyes, this is decent value for a company of Marks and Spencer’s stature.

The retailer had fallen behind its competitors in recent years. Its stores and products were outdated and it was struggling to keep up. But thanks to a new turnaround strategy, led by CEO Stuart Machin and his predecessor Steve Rowe, it is thriving.

I think the country still has some problems to deal with, including the cost of living crisis. An economic slowdown could push people to cut back on spending. Competition also remains a threat.

But with interest rate cuts expected in the coming months, I think the retail sector should get a boost as spending is expected to pick up. That should give the stock a boost.

Barclays

I also continue to love the look of Barclays (LSE:BARC). Since I first bought its shares in August last year, I have had decent success. But even after rising 41.9% so far this year alone, I plan to buy more shares.

The stock looks very cheap. It currently trades at 8.6 times earnings. Barclays’ price-to-book ratio is just 0.4, where 1 is considered fair value. It’s for reasons like these that analysts have set a 12-month price target of 258.9p for the stock. That’s a 17.4% premium to its current price.

After years of lagging behind competitors, the bank announced a cost-cutting plan in February that will save it billions over the next two years. As part of the plan, it is streamlining its operations to just five divisions.

The closest threat is falling interest rates. This will squeeze Barclays’ margins. Moreover, Barclays generates a good portion of its revenues in the UK. The economic uncertainty that will persist in the coming months could therefore hurt its share price.

But I hope that in the coming years, falling interest rates will boost investor sentiment. Plus, I can earn passive income from its 3.9% dividend yield, which will keep me going if the stock experiences some short-term volatility. Over the next three years, the company plans to return up to £10bn to shareholders through dividends and share buybacks.