I’m looking for stocks to buy in March. And I’m looking for shares that are selling cheaply – below their intrinsic business value.
Finding bargains in the stock market involves looking at stocks that are out of favour with investors. As Warren Buffett says:
The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty is actually the friend of the buyer of long-term values.
At the moment, there are three stocks on my radar. I think that each of them could be a great opportunity while investors are looking the other way.
J D Wetherspoon
Top of my list of stocks to buy is JD Wetherspoon (LSE:JDW). The business has a reputation for offering the lowest prices to customers, which I think is a really valuable feature.
For obvious reasons, the J D Wetherspoon’s share price fell sharply during the pandemic. Since then, though, the business has been recovering, but the stock hasn’t.
Revenue is close to 2019 levels and free cash flow looks set to follow. The company has been investing in its pubs and buying freehold rights to improve its costs going forward.
The risk of higher alcohol duties in the UK is an ongoing challenge for the business. But the company’s scale gives it an advantage over the rest of the sector in coping with this.
At £5.25 per share, I think the stock is a great value. That’s why it’s at the top of my list of stock market bargains this month.
Premier Foods
I’m also looking at shares in Premier Foods (LSE:PFD). The company makes branded and non-branded groceries and sweet treats.
As with JD Wetherspoon, I think that investors are missing the fact that this business has been making significant improvements recently. That makes the stock attractive to me today.
Branded products make up around 85% of the company’s sales. And its most recent update reported 9% growth in sales in this category.
One potential risk is the company’s balance sheet. Debt levels had been coming down, but they edged up in the last quarter.
But this is due to a recent acquisition and management reiterated its commitment to bringing net debt down. Nonetheless, I think it’s something for investors to keep an eye on.
Overall, I see Premier Foods as a durable company. And at a price-to-earnings (P/E) ratio of around 11, I think it’s cheap today.
Alphabet
Third on my list is Google’s parent company, Alphabet (NASDAQ:GOOG). I’m looking to take advantage of the stock being around 34% lower than it was a year ago.
The latest issue denting its price comes from Microsoft’s integration of ChatGPT into its own search engine. This is a genuine risk, but I think investors are overestimating its significance.
Alphabet relies heavily on Google for its revenues, so disruption would be a big problem. But I think that its market position is harder to displace than the market imagines.
On top of this, the company is also working on integrating AI into its own operations. It’s fair to say that its Bard tech is a work in progress, but the same is true of ChatGPT.
I see the fall in Alphabet shares as an opportunity and think it’s a great business at an attractive price.
