The market’s recent declines have thrown up some great bargains for Foolish investors who aren’t afraid to invest against the grain. Three such bargains are BT (LSE: BT.A), British Land (LSE: BLND) and Legal & General (LSE: LGEN), all of which are well-run companies with illustrious histories and, after recent declines, are now trading at attractive valuations.
The market leader
After its recent acquisition of mobile operator EE, BT is now the UK’s undisputed top telecoms company, which makes it the perfect investment for long-term investors who want a buy-and-forget investment for their portfolio.
Over the past decade, BT has shown that it can continue to rack up returns for investors even in the most turbulent times. For example, over the last ten years, BT’s shares have produced a capital gain of 119%, and that’s excluding dividends. If you include dividends, returns would have been closer to 160%, excluding reinvestment. Over the same period, the FTSE 100 has returned a shocking -1.3%, excluding dividends. (Yes, minus 1.3% — that’s not a typo).
And BT looks set to continue to outperform going forward. BT’s earnings per share are expected to fall this year due to the higher number of shares in issue following last year’s rights issue. However, the company’s underlying pre-tax profit is expected to increase by 19% this year and a further 11% during 2017. BT’s shares currently yield 2.9% and trade at a forward P/E of 15.5.
Property concerns
British Land has seen its shares fall following concerns about the state of the London real estate market. This sell-off has left British Land trading at its biggest discount to net asset value since 2011.
British Land is one of the UK’s largest REITs, and it’s also one of the cheapest. At the end of September 2015, the company’s net asset value came in at 891p per share, so at present levels, the company is trading at a 23% discount to NAV.
Still, if the commercial property market is about to take a tumble, British Land’s NAV will fall in line with the wider market. The company’s dividend yield stands at 4.1%, and the shares currently trade at a forward P/E of 25.1.
A play on retirement
As I’ve written before, Legal & General believes that over the next 15 years the value of savings in UK defined contribution pension schemes will nearly quadruple. It’s estimated that the value of defined contribution pension schemes will jump from around £700bn today to approximately £3.3tn by 2030, as more people take control of their own pensions.
As one of the UK’s largest savings and pensions providers, Legal & General is one of the best ways to play this boom. After recent declines, the company’s shares now trade at their lowest valuation in more than two years. Legal & General’s shares currently trade at a forward P/E of 13.9 and support an incredibly attractive dividend yield of 5.6%.
