Every month, we ask our freelance writers to share their top ideas for value stocks to buy with investors — here’s what they said for May!
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Barclays
What it does: Barclays is an international bank based in the UK, offering a range of services such as retail and investment banking.
By Charlie Keough. For May, I like the look of Barclays (LSE: BARC). The stock has taken a hit this year following the turmoil we have seen in the banking sector with the likes of Silicon Valley Bank. However, I think Barclays at its current price is a steal.
Firstly, as I write, the stock currently trades on a price-to-earnings (P/E) ratio of just over five. To me, this signals that Barclays shares are severely undervalued. When compared to competitors such as HSBC, which has a P/E of over nine, Barclays looks even better value.
On top of this, with a dividend yield of around 4.7%, Barclays shares could also be a smart way to generate passive income. As inflation continues to sit above 10%, this could come in handy in the months ahead.
The business will face headwinds in the months ahead with volatility in the banking sector and persistent inflation. But at its current price, I’d be tempted to snap up some shares in May.
Charlie Keough does not own shares in Barclays.
BP
What it does: BP is a multinational oil and gas company and one of the world’s largest companies measured by revenues and profits.
By Matthew Dumigan. Despite rising significantly in 2022, I’m convinced BP (LSE:BP) stock still represents significant value today.
Don’t get me wrong, there are certainly challenging times ahead. For starters, it would only take a sustained downward trend in oil prices for BP to start taking on water.
That said, BP expects oil prices to be supported by a combination of improving Chinese demand and uncertainty surrounding Russian exports.
Moreover, I’m a big fan of the group’s ambitious investment plans as I see them as a key driver of growth moving forward.
The company recently released a strategy update confirming up to $16bn of investment up to 2030. This is to be split evenly across projects in oil and gas and the energy transition.
In addition, the group’s profits more than doubled last year to a staggering £23bn, reflecting the best result in the company’s 114-year history.
Despite all of this, BP’s price-to-earnings ratio sits at an estimated 4.5, which is lower than main competitor Shell’s (around 7.7).
Matthew Dumigan does not own shares in BP.
Safestore
What it does: Safestore is the UK’s biggest provider of self-storage units, with 130 stores in its home market and 51 spread across Europe.
By Mark Tovey. I see bright skies ahead for the self-storage sector. As the UK’s leading provider, Safestore (LSE:SAFE) could benefit.
Over the decades, the price of consumer goods – like gadgets, clothes and furniture – keeps coming down. The cost of space, however, keeps rising in real terms.
Over the last 100 years, prices in the UK have increased eighty-fold, but average earnings have risen 350-fold.
The exception to this rule is housing. In 1930, the average UK house cost three times the average annual salary. Today, the figure is 10.
In short, we are cramming more things into less space.
Safestore provides the answer to that problem. And with a price-to-earnings ratio under 5, the company’s shares looks cheap.
Of course, this value stock faces competition from Big Yellow in the UK. In Europe, the company has only 15% of total market share.
Still, with its modest price tag and big growth potential, I’m happy to give the stock storage space in my portfolio.
Mark Tovey has shares in Safestore.
