UK shares: 3 cheap stocks to buy in February

When it comes to investing, one of the most famous Warren Buffett quotes pops into my head – “Buy low, sell high”. With that in mind, here are three relatively cheap UK stocks that I recommend.

1. easyJet

Initially lagging behind the performance of its peers in 2022, easyJet (LSE:EZJ) now FTSEThe highest flyer of the year, up 45%. This is down to a stellar Q1 update, which sent the stock flying above £5, as it now expects to turn a profit this year.

To make it sweeter, the number of seats has not yet reached pre-pandemic levels. What’s more, forward bookings remain strong, meaning there is still plenty of room for growth for easyJet. Additionally, with orders for more fuel-efficient aircraft, and the rapid growth of the company’s Holidays division, there is also room for margin expansion.

These factors have led some brokers to upgrade their ratings on the stock. As such, the UK stock currently has an average price target of £4.58. While this is lower than the current share price of £4.90, it may represent an expensive buy, it should be noted that easyJet’s current and forward valuation multiples remain low.

Metric	Multiples of value	Industry average
Price-to-book (P/B) ratio.	1.7	1.8
Price-to-sales ratio (P/S).	0.7	0.9
Price-to-sales ratio (P/S).	0.5	0.9
Price-to-earnings (P/E) ratio.	21.6	27.3

2. Mark and Spencer

Up to 15% this year, Marks and Spencer (LSE:MKS) also made my list. As was the case with easyJet, the British retailer shared its joy with investors last month, announcing an impressive Christmas update.

Aside from posting healthier growth than Tesco and Sainsbury’s, M&S also saw sales figures rise over Christmas. As a result, CEO Stuart Manchin reported market share gains in the grocery and apparel businesses.

However, higher energy and labor costs are likely to hit the company’s bottom line in the short term. However, I’m investing for the long term, and the future certainly looks bright for a forgotten business.

Management has chosen to accelerate the store rotation program which has proven to be more efficient to increase the top line and margin. In addition, M&S’s financial situation is slowly improving, as are analysts’ price targets. And with the low price, I’ll be stocking up most of the stock in February.

Metric	Multiples of value	Industry average
Price-to-book (P/B) ratio.	1.1	1.3
Price-to-sales (P/S) ratio.	0.3	0.3
Price-to-Earnings (P/E) ratio.	9.5	14.0
Price-to-sales ratio (P/S).	0.2	0.5
Price-to-earnings (P/E) ratio.	10.2	12.1

3. Burberry

Unlike the other two UK stocks I have listed, Burberry (LSE:BRBY) posted a mediocre update in January. However, the guidance was enough to send the stock higher, finishing the month up nearly 20%.

As the group derives much of its revenue from China, profits have been weighed down significantly over the past year due to the country’s strict zero-Covid strategy. Having said that, the reopening, high household savings, and China’s increasingly affluent middle class are providing strong tailwinds for designers.

This presents an incredible long-term investment opportunity for me as Burberry plans to expand its margins and Chinese market share in the medium term.

These catalysts have boosted sentiment on the stock. Thus, it is not a surprise to see it trading at a P/E of more than 22. But despite the pricier multiple of the UK share, it is still lower than its French counterpart. The Oracle of Omaha once said, “What you pay is what you get”and that I feel like I took with Burberry.

Metric	Multiples of value	Industry average
Price-to-book (P/B) ratio.	6.1	8.0
Price-to-sales (P/S) ratio.	3.1	6.1
Price-to-Earnings (P/E) ratio.	20.9	29.0