When it comes to hunting for cheap shares to buy, British investors are spoilt for choice. Compared to other markets like the US, UK stocks are trading at far lower multiples, creating the opportunity to snap up terrific companies at fantastic prices.
This month, three businesses have caught my attention: Rightmove (LSE:RMV), Safestore, and Greencoat UK Wind. None are without flaws, but with each trading at attractive multiples or tasty-looking dividend yields, it’s hard not to be tempted, in my opinion.
Targeted for acquisition
The underappreciated nature of British stocks hasn’t gone unnoticed by private equity and international investors. In total, 19 FTSE 350 companies received takeover bids. And Rightmove is on that list, along with Anglo American, Darktrace, DS Smith, Hargreaves Lansdown, Ascential, Britvic, Centamin, Currys, and Redrow, among others.
Some offers were accepted, others are still being negotiated. However, in the case of Rightmove, attempts by Australian rival REA Group to take over its operations were firmly rejected. It seems even Rightmove’s management believes its stock’s being significantly underappreciated by markets right now, both by the rejection of four takeover bids and the continued repurchasing of its own shares.
For reference, Rightmove shares are currently priced at a forward price-to-earnings ratio of just 23. By comparison, its closest US competitor, CoStar, is sitting at a massive 72 times forward earnings. So relative to its peers, the stock looks like a bargain, especially when considering activity in the housing market appears to be picking up in 2025.
More than 140,000 properties across the UK were listed in January, according to the latest data from TwentyEA – a 7.3% increase year on year. And subsequently, Rightmove has already reported an uptick in listings on its platform for the first two months of 2025, as have alternative websites like Zoopla.
In other words, Rightmove’s growth might be set to accelerate despite what the relatively cheap valuation implies. That’s why I’m taking a closer look at the business as a potential candidate for my top shares to buy list this month.
What could go wrong?
Rightmove appears to have promising prospects. But that doesn’t make it a guaranteed winner. One of the big reasons why CoStar’s trading at a much loftier valuation is because it has announced plans to challenge Rightmove’s industry-leading status in the UK. And it seems investors are baking the success of the strategy into the share price.
CoStar recently acquired rival platform OnTheMarket with the intent of stealing market share with lower prices and undercutting Rightmove’s pricing power. Considering CoStar has a market-cap of $33.5bn (£25.6bn) versus Rightmove’s £5.4bn, this threat is one that most investors aren’t ignoring.
But this isn’t the first time a business has tried to dethrone Rightmove. And for over a decade, the group has defended and expanded its position while rivals crumbled. Looking again at the valuation, it seems that investors are underestimating Rightmove’s defensive capabilities – a mistake that’s proven costly in the past.
Personally, given the firm’s impressive track record, I remain bullish. This isn’t just for Rightmove, but for Safestore and Greencoat as well. Each firm’s dealing with its own challenges. Yet it seems the market’s underestimating their value-building capabilities, potentially creating a lucrative buying opportunity for long-term shareholders.
That’s why I think these are investing opportunities worthy of consideration.
