2 top UK value stocks for 2024

Stephen Wright has found two stocks he thinks are firmly in value territory to kick off 2024. One is a FTSE 100 bank, the other is a FTSE 250 footwear company.

| 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.

Value investing is about finding stocks to buy that are selling for less than they’re worth. I can see two UK stocks that fit the bill at the start of 2024.

Both have been having a tough time lately. One is a FTSE 100 bank that has failed to benefit from rising interest rates and the other is a FTSE 250 fashion footwear company that has gone nowhere but down.

Barclays

Rising interest rates through the first part of 2023 have been good for UK banks. In general, they’ve allowed better returns on loans, which has resulted in higher margins. 

To some extent, that’s been offset by higher charges for loan losses, but profitability has generally been higher across the UK banking sector. Barclays (LSE:BARC) has been the exception though.

The stock has fared significantly worse than its rival Lloyds Banking Group in 2023. One of the big reasons is Barclays has a significant investment banking division. 

After some ideal conditions with interest rates near zero, investment banking activity has fallen sharply as rates have increased. And that has created a drag on the company’s profits.

There’s a risk that the Barclays business model of combining investment and retail banking creates a model that underperforms in any environment. But I think things will work out well over time.

The market is expecting a cut in rates and I think the bank stands to benefit. At a price-to-book (P/B) ratio of 0.33, the stock is firmly in value territory and on my list to consider buying.

Dr Martens

Not much has gone right for Dr Martens (LSE:DOCS) since it first came onto the public markets in 2021. But I think the current share price reflects some very low expectations for the business.

Over the last 18 months or so, the share price has fallen by around 80%. But with the company not obviously facing bankruptcy or in a fight for survival, this looks like a mispricing to me.

The falling share price hasn’t been entirely unjustified – the business has issued five profit warnings since in six quarters. But I do think it’s an overreaction.

Dr Martens has faced two major problems recently. The first is weak demand in the US, coming from a difficult macroeconomic environment, and the second is issues with its e-commerce launch.

To some extent, both of these are the company’s fault. But both look temporary to me, which is why the stock is on my buying list for 2024.

Optimism about the US economy elsewhere in the stock market isn’t currently being reflected in the Dr Martens share price. The risk, of course, is that  this positivity could be misplaced.

On my future buy list

Barclays and Dr Martens look to me like good companies that are going through short-term downturns. As a result, both stocks are on my buying list for the start of this year. 

More than that though, I think both are good businesses. So it’s not that I’m looking to buy the stocks today to sell them when the price recovers – these are on my list to hold forever.

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.

Stephen Wright has positions in Dr. Martens Plc. The Motley Fool UK has recommended Barclays Plc and Lloyds Banking Group 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

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

A FTSE 250 share I’d buy and aim to hold for 20 years!

This FTSE 250 share has soared more than 2,000% during the past decade. Our writer Royston Wild thinks it has…

Read more »

Bournemouth at night with a fireworks display from the pier
Investing Articles

3 heavily discounted UK shares to consider buying in November

These three UK shares have been dragged down and our writer believes they're trading below their true value as we…

Read more »