2 top UK value stocks I might buy in May!

Recent stock market volatility has created a sea of top-quality value stocks. These cheap UK shares have attracted my attention today.

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I’m on the hunt for the UK’s best value stocks to snap up next month. Here are two that sit near the top of my shopping list.

Vistry Group

I’m thinking of boosting my exposure to British housebuilders as the homes market stabilises. FTSE 250-listed Vistry Group (LSE:VTY) is one such UK share on my radar today. This value stock offers a blend of low earnings multiples and juicy dividend yields.

For 2023, the builder trades on a forward price-to-earnings (P/E) ratio of 9 times. It also carries a 5.8% dividend yield, more than double the 3.2% average for FTSE 250 shares.

Latest financials this week from Persimmon further illustrated the steady recovery in new homes demand. It said that net private sales hit 0.62 per week in the first quarter. This was more than double the rate achieved in the previous three months.

The likelihood of further interest rate rises poses a threat to Vistry and its peers. But fierce competition in the mortgage market is helping to reduce the impact on buyer affordability. Meanwhile, homes demand among first-time buyers remains strong due to rocketing costs in the rental sector.

On balance, I think housebuilders like this are great shares to own for the long term. Weak construction rates have created a huge shortage of new homes in the UK. And this problem looks set to worsen due to a poor development pipeline across the country.

As the domestic population steadily increases, I expect the prices Vistry asks for its newbuilds to grow strongly.

Redcentric

As our lives become increasingly digitalised, certain UK tech shares have exceptional room for earnings growth. Redcentric (LSE:RCN) is one such business on my radar today.

This Alternative Investment Market (AIM) stock is a specialist in helping people to work remotely. It does this by building cloud platforms, network services, cybersecurity software and other tech that helps workers go about their daily business away from the office.

Fresh trading numbers from Microsoft this week illustrate the huge sales potential of Redcentric’s products. Sales across its cloud computing business leapt 27% in the first three months of 2023, ahead of market expectations.

Redcentric doesn’t have the huge development budgets of Microsoft and other major US market players, and this poses an obvious threat to earnings growth. Yet the progress the business is making in this congested market provides room for encouragement. Revenues here jumped 53% year on year in the first quarter.

City analysts believe Redcentric’s annual earnings will soar 96% in the current fiscal year (to March 2024). This means the company trades on a forward price-to-earnings growth (PEG) ratio of just 0.1.

Any reading below 1 indicates that a stock is undervalued by the market. For investors seeking top growth shares at a cheap price I think this one is too good to ignore.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has positions in Persimmon Plc. The Motley Fool UK has recommended Microsoft. Views expressed on the companies mentioned in this article are those of the writer 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 diverse range of insights makes us better investors.

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