Image source: Getty Images
I have been looking for cheap shares to buy for my portfolio. Although the UK stock market overall has been doing fairly well so far in 2025, I think there are still possible bargains.
Here are a couple that have caught my eye and I’m very likely to buy this month.
Domino’s Pizza
I recently bought shares in Domino’s Pizza (LSE: DOM). The London-listed company is the master franchisee for the famous pizza brand in the British Isles.
Down 15% in a year, it looks cheap to me on a price-to-earnings (P/E) ratio of 11. And it offers a dividend yield that currently stands at 4.3%. That looks attractive to me.
What I like here is the simplicity and power of the business model. The company has a large customer base, many of whom order regularly. It has long expertise in the pizza business and is solidly profitable.
From central marketing to some ingredient production, it enjoys economies of scale. So as Domino’s continues to build its presence on these shores in years to come, hopefully it can improve its profit margins further. That may also give it a wider competitive edge versus rivals.
There are risks, of course. One is weak consumer sentiment. Domino’s has been ploughing a lot of its marketing effort lately into value-based advertising. That suggests customers may already be showing some hesitancy to splash the cash.
However, I reckon the current price is good value. My stake is small, but if I have spare money to invest in July I will be happy to add some more Domino’s shares to my portfolio.
Greggs
Another company I have bought this year and am eyeing a higher stake in is Greggs (LSE: GRG). If I have available funds to invest over the coming month, it is also on my list of cheap shares to buy.
On a P/E ratio of 13, it is a bit pricier than Domino’s. The yield of 3.5% is also lower, though I still see it as attractive.
So what attracts me to it?
For one thing, it has built a large, loyal customer base. Domino’s is trialling a customer loyalty programme at the moment, but Greggs is an old hand at using its app-based loyalty programme to drive sales.
Its network of thousands of shops in handy locations, is another strength. I think its competitive prices, decent quality and unique products are all also an aid when it comes to getting customers through the doors.
Even more than Domino’s, centralised production demonstrates how Greggs is able to exploit economies of scale. That can help give it competitive advantages.
The share price has fared even worse than Domino’s in the past year, tumbling 28%. The company warned Wednesday (2 July) that although sales in the first half grew 6.9%, its full-year operating profit could fall short of that seen last year. I think that may lead to further short-term share price weakness.
Yet, like Domino’s, this is a solidly profitable business. The impact of higher wage and tax costs introduced several months ago, remains to be seen at the full-year level. I see that as a risk to profitability, explaining the recent weak share price performance.
However, for the great quality business that it is, I reckon the Greggs share price looks cheap.
