I’ve been scouring the London stock market for the greatest value stocks to buy next year. I’m seeking companies that trade on rock-bottom price-to-earnings (P/E) ratios and carry market-beating dividend yields.
Here are three cut-price UK shares I’ll be aiming to buy at the next opportunity.
Ramsdens Holdings
Many British stocks face considerable uncertainty in 2024 as the domestic economy sags. Shock news that UK GDP shrank 0.3% in October suggests that a potential recession is coming down the tracks.
However, pawnbrokers like Ramsdens Holdings (LSE:RFX) perform strongly in such an environment. Indeed, this company printed record profits of above £10m during the 12 months to September as the cost-of-living crisis endured (exact full-year numbers are due to be confirmed in mid-January).
Ongoing expansion gives Ramsdens extra opportunity to grow earnings as well. It opened eight new stores in fiscal 2023 to take the total to 161. It has also invested heavily in its online channel to capitalise on the e-commerce boom.
Today the firm trades on a low P/E ratio of 8.7 times for 2024. It also carries a chunky 5.2% dividend yield.
The company faces severe competition from money lenders. But I believe this is priced into Ramsden’s valuation.
Primary Health Properties
Real estate investment trusts (REITs) have been struck by high interest rates more recently. Persistent inflationary pressures may mean interest rates stay higher for longer too, keeping net asset values (NAVs) of these stocks under pressure.
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Yet I still think Primary Health Properties (LSE:PHP) is an attractive value stock for the New Year. Moderating inflation, and the poor state of Britain’s economy, mean that rates are likely to come down. Besides, this UK property stock has excellent defensive qualities that make it a top pick in these uncertain times.
As its name implies, the FTSE 250 firm specialises in the rock-solid healthcare sector. Furthermore, the rents it receives are derived from government bodies. Finally, the company has its tenants tied down on long-term contracts (its weighted average unexpired lease term (WAULT) stood at 10.6 years as of June).
This all explains why analysts expect PHP’s long record of annual earnings growth to continue next year. So the company trades on an undemanding P/E ratio of 14 times. A large 7% dividend yield provides an added sweetener.
Greencoat Renewables
Investing in renewable energy stocks could be another good idea to build wealth next year. Not only is demand for cleaner power sources steadily growing. The stable nature of electricity demand makes these companies lifeboats in troubled times like these.
Greencoat Renewables (LSE:GRP) is one such stock on my radar. Today it trades on a P/E ratio of just 11.4 times for next year. It also packs a huge 6.9% dividend yield.
Purchasing green energy shares comes with acceptance that earnings may drop during periods of adverse weather. During cloudy and calm conditions power generation can drop off a cliff.
But Greencoat’s wide geographic wingspan helps to reduce this risk. The wind and solar farms it owns are spread across Ireland and mainland Europe.
I think this UK share could be a great long-term buy as the fight against climate change heats up.
