2 UK stocks to buy now at huge discounts

A stack of one pound coins has fallen

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Now I have been looking for UK stocks to buy for my portfolio. The good news is that some stocks are losing ground, which means I can buy them today much cheaper than before.

Here are two examples of such discounted share trading, which I’m considering adding to my ISA in September.


Shares in furniture retailers Dunelm (LSE: DNLM ) have lost almost half their value in the past year, falling 45% over that period. but why?

Clearly, there is concern among investors about the risk that falling consumer spending will lower earnings for retailers. Many home decorations are seen as a necessity. So as family budgets get tighter, they can be put on hold to pay for everyday needs like food and energy.

But I’m not sure that will happen. Dunelm also has some very affordable products that can be just what consumers need to pamper themselves when they are in a pinch.

I think the high quality of this company makes it stand out as an investor. It increased sales by 16 percent last year, and sales are up 40 percent from before the pandemic. The company has a track record of growing its market share, which means it should be able to improve sales even if overall market demand is flat.

The company is debt-free, giving it an enviable balance sheet heading into bankruptcy. It also gives 5% yield. Despite these attractive financial qualities, Dunelm shares trade at a price-to-earnings ratio of less than 10.

These look like UK stocks to buy and hold in my portfolio right now – which is what I’m doing. I have already bought some Dunelm shares and am planning to buy more in September.

Straight line

Another company that has seen its share price decline over the past year is insurance. Straight line (LSE: DLG) shares are trading down 32% from 12 months ago.

There are some reasons for that. Rising second-hand car prices threaten to make the insurance business less profitable than it used to be. New rules on renewal rates introduced this year could reduce profit margins for insurers.

But insurance is a sustainable business that I expect will benefit from strong continued demand. Insurers are experts at matching their rates to what the market can bear, so I expect Straight Line to be profitable.

Although profits fell 32% in the first half compared to the same period last year, Direct Line still made £178m in six months – a cool million pounds a day. That helps support a large dividend yield, which currently sits at an attractive 10.8 percent.

The company has a strong customer base and over 13 million policyholders. This can lay the foundation for further gains. I’m optimistic about the long-term outlook for Direct Line, even if the stock price drops. If I had spare cash to invest and wanted a UK stock to buy now, this is one of the companies I would consider.

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