I have been casting around for cheap shares — and it is a challenge to find any. The trouble is, the more cyclical stocks have already enjoyed a good run. This looks premature to me. Barely have the green shoots of recovery been spotted than investors are mentally picking their peas and weighing their pumpkins, but I know there are rusts, cankers and rots awaiting to rival the plagues of Egypt.

For UK companies, three problems await. First, those with big international business are going to be hit by the recovery in sterling. Second, rising oil and raw material prices will squeeze manufacturing margins and third, interest rates are bound to rise sharply within months to head off inflation and help the government sell bonds to fund its debt. That will knock back property.

One source of inspiration on these occasions is to trawl through the worst-performing shares list over the previous month. It points to stocks that are out of favour and may therefore be good long-term value. One stock stands out: Marks & Spencer. Its shares have fallen 15% or so since the last set of figures a month ago.

On the basis that nobody has a good word to say for it right now, I thought I would take a look. The result is that I have put M&S on my buy list. This year is M&S’s 125th birthday, although it has found precious little to celebrate. Granted, it pulled in plenty of punters for a “penny bazaar” extravaganza last month when its tea towels, scarves and leather passport holders were sold for the price Michael Marks and Thomas Spencer charged on their Leeds market stall in 1884. Not that Messrs M and S sold leather passport holders, but we’ll let that pass. It all went well — unlike M&S’s move to charge £2 extra for its super-size bras. The idea was greeted with a double-D sized raspberry by customers. Faced with a Busts for Justice campaign, Marks immediately recanted — then cut the price of all bras for a time.

However, M&S’s last set of profit figures showed a distinct lack of under-wiring. Profits were down 40% on a near-6% fall in like-for-like sales. It talked of “investing in margin” (business-speak for price cuts) which it will continue to do this year. Another fall in profits is on the way. Much of the good work by Sir Stuart Rose looks to have been undone.

However, one thing the announcement did was to end speculation about the dividend. A cut was expected, although a year ago Rose presided over a 23% rise in the payout. This time, quite rightly, the final dividend was cut by a third and the half-time payout in the current year will be reduced too.

There is a new base for the annual dividend of 15p a share.That, at least, allows comparison with other retailers. At anything under £3, M&S shares now yield over 5%. That is a sizeable premium to quoted rivals such as Tesco and J Sainsbury.

M&S’s share of the grocery trade falling from 4.3% to 3.9% shows it has been stranded up-market when its customers have gone mostly down-market. But the situation in food appears to have been stabilised.

M&S Direct is making good progress. In clothing, the recent strength of the pound is good news as a lot of M&S’s stock is sourced from Asia in dollars. It has no need to refinance any of its debt for another year and it is sitting on a wealth of freehold properties.

One thing is certain: Marks will come right again. And when it does, the shares will be a lot higher than now.

Elsewhere in the portfolio, the surge in the oil price has done wonders for my most recent purchase, Shell. This is my biggest holding by some margin and one I bought mainly for income’s sake. A 7%-plus starting yield was simply too good to ignore. But it is turning into a stellar performer. There is no substitute for a bit of luck.

Times Recommends

• How to sell your home in a downturn
• How to boost your spending power
• Unemployment benefits explained