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Stock market rally: 2 dirt-cheap UK shares I’d buy in an ISA for the new bull market

Royston Wild
·3-min read
The UK national flag in front of Canary Wharf skyscrapers where professionals trade shares for a living.
The UK national flag in front of Canary Wharf skyscrapers where professionals trade shares for a living.

Global share markets have soared in value in recent days as hopes of a Covid-19 vaccine have ballooned. Strong demand for UK shares in the new trading week is pushing stock prices higher again. The FTSE 100, for one, is surging back to Wednesday’s five-month peaks of around 6,400 points.

It’s too early to claim the new bull market has begun. Certainly while Covid-19 infection rates continue to surge and a vaccine is still to be signed off. And also while other issues, such as Brexit and bickering over trade tariffs, rumble on in the background.

What’s pretty much definite though, is that the bull market will come. It’s simply a question of timing. And now’s the time for UK share investors to start thinking about what stocks to buy to get rich from the economic recovery.

A FTSE 100 firecracker

Here’s a selection of top-quality UK shares I’m thinking of adding to my Stocks and Shares ISA today. I expect them to enjoy explosive earnings growth as the new bull market kicks off. And, what’s more, at current prices they look too cheap to miss too:

The growth of e-commerce has been one of the big investment themes of 2020. I bought DS Smith (LSE: SMDS) shares a couple of years back to play this idea, and I’m tempted to buy more right now. According to Adobe Analytics, online spending from US customers during the November and December Holiday period will soar 33% from the same period last year.

It’s a trend which box maker DS Smith will profit from, thanks to its recent expansion into the US marketplace. And it’s a phenomenon that will be replicated in the FTSE 100 firm’s other territories. I believe this UK share will be a great way to play the new bull market too as improving economic conditions will drive broader consumer spending levels even higher. Today, DS Smith trades on a forward price-to-earnings (P/E) ratio of 14 times. It boasts a chunky 3.8% dividend yield too, providing plenty of bang for an investor’s buck.

Another UK share I think trades at an unmissable price

Ryanair Holdings (LSE: RYA) will likely be another early beneficiary from the economic recovery. The travel sector has been one of the hardest hit in 2020, smacked by a double whammy of a severe economic downturn and travel restrictions stemming from the Covid-19 crisis. If a coronavirus vaccine is released in the coming months, as many now predict, Ryanair can expect its profits to soar as strong pent-up demand for holidays is set loose.

Buying into UK shares like this obviously remains a huge risk. But this Irish flyer has a strong balance sheet that’ll see it through the crisis. And it’ll benefit from rising traveller spending power and a thinning out of the market during the economic recovery. I reckon its forward P/E ratio of 14 times makes Ryanair an attractive buy for the new bull market.

The post Stock market rally: 2 dirt-cheap UK shares I’d buy in an ISA for the new bull market appeared first on The Motley Fool UK.

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Royston Wild owns shares of DS Smith. The Motley Fool UK has recommended DS Smith. 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.

Motley Fool UK 2020