3 value stocks I’d consider buying before markets jump in 2024

An abundance of bearishness means now could be a great time to go hunting for value stocks. Here are three that catch our writer’s eye.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

No one truly knows where markets are going in the near term. However, I’m increasingly hopeful that we’ll see a stellar recovery in 2024 as interest rates potentially moderate and economic sentiment improves. That’s why I’m on the hunt for value stocks to buy in the last quarter of 2023.

Beaten, not broken

One example that catches my eye is FTSE 100 medical tech company Smith & Nephew (LSE: SN).

Now, it’s fair to say that investors have been avoiding this stock for a while and I can see why. Huge backlogs on elective surgery thanks to the pandemic have seriously impacted earnings.

More recently, the market seems to be concerned by the arrival of new weight loss drugs and how these might reduce the need for its products. This helps to explain why the share price has now resumed its downward trajectory despite a brief rally in the first half of 2023.

However, a price-to-earnings (P/E) ratio of 12 just feels a bit low considering many countries have ageing populations. Moreover, Smith & Nephew’s portfolio encompasses orthopaedics, sports medicine, ENT and advanced wound management. This is no one-trick pony.

So, while it may take a while longer for the bulls to return, I do think a strong recovery is on the cards.

While never guaranteed, the 3.5% forecast dividend yield is decent compensation in the meantime.

Cheap income steam

As I type, shares in the FTSE 250 member Investec (LSE: INVP) are down 12% in 2023. That feels a bit harsh considering its most recent trading statement.

For the six months ending 30 September 2023, the dual-listed bank expects adjusted operating profit of between £428.7m and £449.6m. That would be a decent rise on the £405m generated in the same period in 2022 and “driven by continued client acquisition, positive effects from higher global interest rates and year-on-year growth in average lending books“.

I think this makes the valuation — at a little less than seven times forecast earnings — look pretty compelling. The case is further boosted by a monster 7% yield that’s set to be safely covered by profit.

Naturally, it pays to remain cautious. South Africa — where the company was founded — isn’t the most politically stable of countries and corruption is rife.

Accordingly, I’d make sure I was already sufficiently diversified away from the financial sector if I were to buy Investec shares today.

Solid foundations

A final value stock I like is one I’ve actually been accumulating throughout 2023: housebuilder Persimmon (LSE: PSN).

Since precise timing in investing is impossible, I’m not surprised that my position is currently underwater. However, I’m staying put for several reasons.

First, we already know that higher interest rates have reduced demand and house prices have fallen. I reckon at least some of this is factored into Persimmon’s price-to-book value of just over one.

Second, the sector is in far better financial shape than it was during the property crash of 2007. This gives me confidence most members will ride out the storm without issue.

Third, the company continues to pay dividends (albeit reduced). A forecast 5.5% yield is more than I’d get from a FTSE 100 tracker.

The question of whether to add to ‘losing’ positions will always divide investors but I’d be willing to top up my holding here.

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.

Paul Summers owns shares in Persimmon Plc. The Motley Fool UK has recommended Smith & Nephew Plc. 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.

More on Investing Articles

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Forget Lloyds’ cheap share price! I’d rather consider this FTSE 100 bargain share

Lloyds' share price might appear too cheap to miss at first glance. But this FTSE-listed share could be a better…

Read more »

Market Movers

Down 6% today, is the BT share price gearing up for a larger fall?

Jon Smith points out why the BT share price has tumbled today, but flags up why the reasoning behind the…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

This FTSE 100 stock is down 25% from its 52-week high. Should I buy?

Analysts think the price-to-earnings ratio of this FTSE 100 stock could fall by half in the next two years if…

Read more »

Investing Articles

£10,000 invested in Nvidia stock just two weeks ago is already worth…

Nvidia stock's been making big losses and big gains so far in 2025, at least on paper. But long-term valuation…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Here’s why Lloyds shares have dipped sharply

Lloyds shares got a boost recently when the Treasury petitoned the Supreme Court to go easy on the car loan…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

A £10,000 investment in BAE Systems shares 5 years ago is now worth…

BAE Systems' shares have lifted off since the start of the decade. But can the FTSE 100 defence giant continue…

Read more »

Dividend Shares

£8,000 invested in high-yield dividend stocks could make this amount of passive income

Jon Smith explains how dividend shares with yields in excess of 8% can be used carefully in order to build…

Read more »

Investing Articles

£5,000 invested in Tesco shares 2 years ago is now worth…

Over the last two years, Tesco shares have provided investors with gains of around 30% per year when dividends are…

Read more »