After a mini stock market crash, the UK share market was jammed with bargain stocks. However, last week, investors’ panic over the Omicron coronavirus variant’s discovery has left even more top firms at prices considered too low to pass up.
With the recent market weakness, consider piling up TIFS for stocks and shares ISA. This company manufactures a variety of fluid-carrying components that major auto manufacturers require. Pure-play EVs and hybrid vehicles, on the other hand, demand significantly higher levels of this technology than automobiles with internal combustion engines, which is positive.
As consumer concerns over the climate crisis worsen, the demand for electric vehicles is also surging. According to the International Energy Agency (IEA) estimates, by 2030 there will be 145 million electric vehicles on the road globally compared to 11 million last year. Naturally, major carmakers want a piece of this action, so they are doubling down on spending in this area as green credentials enhance their brand.
Nissan is the latest major company to declare plans to increase investment in electric vehicles. On Monday, the automaker stated that it will invest ¥2 trillion over the next five years and release 23 electric vehicles by 2030. As carmakers steadily switch from traditional engines, it will benefit TI Fluid System in a big way as it already supplies parts to Nissan.
The fear of the Omicron variant caused the TI Fluid System share price to close at its cheapest for more than a year and other UK shares and the fear of demand for cars and automotive supply chains.
In reality, concerns about the industry’s supply chain — and what this might mean for TIFS’ products in the foreseeable future — have been slowly building for some time. As a result, since the end of the summer, the company’s stock price has been in a downward trend. Furthermore, a near-20% drop in light vehicle production between July and September brought revenues down by 14.7 % at constant currency.
However, this weakness marks a fantastic dip-buying opportunity. This cheap UK share trades on a price-to-earnings (P/E) ratio of just 9.2 times for 2022 at the current pricing of 221p per share. In addition, TI Fluid Systems has a hefty 3.1% dividend yield for the coming year. This is well above the FTSE 250’s broader-ahead average of 2%.
If the shortage of key parts continues to hit car production, then it’s true that the profits could be disappointing. However, according to some industry experts, such as Mercedes-CEO, Benz believes the problem will endure until 2023. Nonetheless, the company’s fantastic long-term outlook — which is intimately linked to the EV revolution — makes it one of the greatest cheap UK shares to buy right now.
Globally the markets are still recovering from the coronavirus pandemic. So the time is right for shrewd investors to buy some potential bargains on great companies which are trading low.
However, it is still a daunting task to select a stock to add to the portfolio for a newbie investor or a seasoned investor during these unprecedented times.