2 Cheap Stocks I Wouldn’t Touch With a Stick in Today’s Stock Market

Looking for the best cheap stocks to buy today? Excellent! Buying stocks at reduced prices can lead to significant returns over time.

But I believe investors should seriously consider avoiding these penny stocks today. Here’s why.

ASOS

Luxury fashion stocks have long outperformed high street and online retailers. But the trend has reversed more recently, with eToro data showing a basket of street stocks rising 11% last year. The company’s basket of luxury stocks fell 8% in the period.

This does ASOS (LSE:ASC) a stock to consider today? I don’t think so, although its shares look very cheap at the moment.

At 421 cents per share, the retailer trades with a price-to-book (P/B) ratio of less than 1. This indicates that the company trades at a discount to the value of its assets.

The ASOS share price has plummeted 87% over the past five years. City analysts expect it to remain in deficit until 2026 at least.

I’m not worried about its low cost. He faces enormous problems that may continue to haunt him for years. “Fast fashion” isn’t just falling out of favor due to consumer concerns about supply chains and the environment. Rivals such as Shein, Temu and Vinted are growing rapidly, increasing pressure on an already highly competitive industry.

The recent debt restructuring and sale of Topshop gives ASOS more financial power to drive its recovery. But although it has more scope to invest in products, for example, I think the odds still seem to be against the company.

Lloyds Banking Group

FTSE 100 to share Lloyds (LSE:LLOY) may also look attractive to bargain hunters. It trades at a forward price-to-earnings (P/E) ratio of 9.1 times and provides a large dividend yield of 5.5%.

The company also trades at a sub-1 PEG ratio, although the discount on that basis is much narrower here.

City analysts believe profits here will fall 13% this year, before rising 12% and 18% in 2025 and 2026 respectively. But Lloyds faces immense challenges in achieving these targets, which explains the bank’s low valuation of 59.6 cents per share.

Like ASOS, the bank faces a struggle to win or even keep customers as competitors such as Revolut and Monzo flex their muscles. This is also far from your only problem.

Margins could be set for a sustained fall if the Bank of England (as expected) steadily cuts rates as inflation eases. With the UK economy also set for a long period of low growth, it is difficult to see how retail banks like this will grow profits.

The ongoing recovery in the property market is a good sign for Lloyds. It is Britain’s biggest provider of home loans, so the recovery in buyer demand will give a big boost to profits.

But that alone is not enough to encourage me to buy the bank. The Lloyds share price is around 1% lower than it was five years ago. I hope you continue to strive for growth.