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    Home » 3 cheap UK stocks to consider buying in an ISA before the next big market rally
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    3 cheap UK stocks to consider buying in an ISA before the next big market rally

    userBy userMay 2, 2025No Comments3 Mins Read
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    Image source: Getty Images

    UK stocks still look cheap after the recent bout of volatility, even though the FTSE 100 hasn’t been hit as hard as US markets. 

    So far, our domestic stock market has shown bags of resilience, possibly boosted by overseas investors giving it a second look, tempted by today’s low valuations.

    Yet I can still see heaps of shares trading at bargain prices that could fly when markets rally. Here are three to consider for a Stocks and Shares ISA.

    Banking on Barclays?

    Barclays (LSE: BARC) is one of the UK’s major high street banks but also retains a large investment banking operation that gives it exposure to global markets. 

    The Barclays share price has stayed steady in the last three turbulent months but that follows a strong run in 2024. Over 12 months, it’s up 44%.

    Thanks to that strong growth, the dividend yield has fallen to just 2.85%. However, that’s misleading. Barclays plans to return at least £10bn of capital to shareholders between 2024 and 2026,via dividends and share buybacks, “with a continued preference for buybacks”.

    Net lending margins could be squeezed if interest rates are cut, which seems more likely as Donald Trump’s tariffs hit global growth.

    The UK economy remains sluggish, and a further downturn could squeeze mortgage demand and business lending. But with a lowly price-to-earnings (P/E) ratio of just 8.2, Barclays looks worth considering.

    Centrica powers up

    British Gas-owner Centrica (LSE: CNA) is a major player in UK domestic energy supply, with additional operations in energy services and infrastructure. Its shares have shrugged off tariff woes to climb 3.7% in the last month and are up 24% over 12. Over five years they’re up a stellar 300%, although that worries me slightly. They surely can’t maintain that momentum.

    They’re still cheap though, with a P/E of just 8.3, and yield of 2.86%. This isn’t bad, given how fast the shares have grown.

    After years of restructuring, Centrica now looks like a leaner, more efficient business. That said, falling wholesale energy prices could pressure margins. 

    There’s also the wider question of how energy demand will evolve, especially with the controversy over net zero targets. Still, Centrica’s low valuation and strong performance make it another to consider.

    Can easyJet fly again?

    Budget carrier easyJet (LSE: EZJ) has had a bumpy ride, with its share price still down 4% over the past year. But it’s jumped 13.9% in the last month as sentiment around European travel has improved.

    EasyJet was previously held back by its lack of exposure to transatlantic flights, which were expected to boom this year. But with US economy slowing fast, that’s now seen as a plus.

    So can the rally mark the start of a longer-term recovery? The shares are priced to go, with a P/E of just 8.4. The trailing yield is a modest 2.35%, but shareholder payouts are likely to increase over time. Lower fuel prices may also give it a lift. Its package holidays division is also making big gains.

    The big challenge is the fragile consumer backdrop. If travel demand slows, easyJet shares could flounder. I think easyJet is both the riskiest and most exciting recovery play of the three. In every case, investors should only consider buying with a long-term view.



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