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ftse And its components are famous for surprisingly cheap valuations. And given the recent decline in the stock market, some stocks have become even cheaper. So, here are three cheap stocks with valuations currently trading near decade lows that I’m buying in April.
1. Taylor Wimpy
Sky-high inflation, mini-budget woes, and rising mortgage rates have caused the housing market to cool significantly over the past year. As a result, housebuilder stocks have suffered, and Taylor Wimpy (LSE:TW) shares have been no exception.
That said, the stock has made a notable correction, jumping 35% from its September low. Still, shares remain reasonably cheap as the builder’s valuation multiple is below historical averages.
Metrics | Taylor Wimpy | industry average |
|---|---|---|
Price-to-book (P/B) ratio | 0.9 | 0.9 |
Price-to-Sales (P/S) Ratio | 0.9 | 0.8 |
Price-to-Earnings (P/E) Ratio | 6.3 | 9.8 |
Forward Price-to-Sales (FP/S) Ratio | 1.2 | 1.2 |
Forward Price-to-Earnings (FP/E) Ratio | 12.8 | 10.4 |
Difficulties in the housing market are also starting to ease, so now might be a good time to build my position. What’s more, home prices are not declining as much as was initially anticipated. If this trend continues, the developer may also see an earnings surprise.
Data Sources: Nationwide, Halifax, Rightmove
Additionally, Taylor Wimpy has a spotless balance sheet, with a debt-to-equity ratio of 2%. Pair that with its asset-based dividend policy and 8% dividend yield, and I don’t see why I shouldn’t be buying more shares at these cheap prices.
2. Barclays
Is leading barclays (LSE: BARC). The hybrid retail and investment bank has been caught in the recent banking crisis. Hence, the bank from its initial rally earlier this year has seen a reversal in the past few months.
But as Warren Buffett once said, “Be greedy when others are fearful”, And given Barclays’ cheap valuation, I think the risk-reward proposition is certainly attractive.
Metrics | barclays | industry average |
|---|---|---|
Price-to-book (P/B) ratio | 0.3 | 0.7 |
Price-to-Earnings (P/E) Ratio | 4.3 | 9.0 |
Forward Price-to-Earnings (FP/E) Ratio | 4.5 | 5.6 |
Having said that, investing in banks can be a risky affair considering their business model. Nonetheless, Blue Eagle Bank’s low-risk deposit base puts it in a strong position to protect itself from turmoil. This is because a large amount of its deposits are insured, reducing the likelihood of a bank run.
Data Sources: Lloyds, Barclays, NatWest, HSBC, Santander UK, Credit Suisse, SVB, Signature Bank
Therefore, I believe shares of Barclays are very cheap at these prices. This could be supported by its average target price of £2.40, which means that buying the stock today could present me with a potential profit of over 70% – and last time I checked, Barclays Growth Stock Not there.
3. Marks & Spencer
Finally, a personal favorite of mine, marks and Spencer (LSE: MKS). Although analysts were quick to write off the stock as inflation began rearing its head, the retailer remained utterly resilient.
As such, those who hear ‘sell’ calls from brokers may be regretting their decision, as M&S stock is up nearly 75% from its October low.
Despite the sharp rise, the stock is still surprisingly cheap as all its multiples remain below the industry average. and considering the tremendous growth potential FTSE 250 Stalwart, this is a screaming buy for me.
Metrics | marks and Spencer | industry average |
|---|---|---|
Price-to-book (P/B) ratio | 1.0 | 1.4 |
Price-to-Sales (P/S) Ratio | 0.3 | 0.3 |
Price-to-Earnings (P/E) Ratio | 10.0 | 13.6 |
Forward Price-to-Sales (FP/S) Ratio | 0.3 | 0.5 |
Forward Price-to-Earnings (FP/E) Ratio | 10.5 | 12.9 |
A combination of sleek stores, a tremendously improved clothing line, upgraded omnichannel experience, strong financials and potential dividend return has me excited. Finally, these improvements are starting to show up in the firm’s latest Christmas update, which has claimed record sales.
With footfall ticking up, food and clothing gaining market share, and shopping frequency increasing despite the cost-of-living crisis, I believe it would be wise for me to add Marks and Spencer shares to my basket in April. Investment is one of the decisions.
The post 3 great cheap stocks to buy in April appeared first on The Motley Fool UK.
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john chung There are positions in Marks & Spencer Group plc and Taylor Wimpy plc. The Motley Fool UK recommends Barclays plc. The views expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a wide variety of insights makes us better investors.
Motley Fool UK 2023
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