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 March!
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Barclays
What it does: Barclays is a UK clearing bank, founded in 1690. Big in business and consumer lending, it also has an investment bank.
By Cliff D’Arcy. Currently trading at 142p each, Barclays (LSE:BARC) shares have dropped 17.7% over one year. This has lowered its market value to £21.5bn.
Long-suffering shareholders despaired as the bank racked up billions of pounds of fines in various mishaps. Right now, Barclays stock looks like a classic value trap.
That said, the shares are so lowly rated that they could offer huge upside. This FTSE 100 stock trades on just 4.2 times earnings, producing an earnings yield of 23.6%.
Likewise, the dividend yield of 5.4% a year is covered 4.4 times by earnings. This is seriously solid coverage, leaving room for future uplifts.
Then again, 2024 could be a tough year for British banks, thanks to falling house prices, lower credit growth and rising loan losses.
Even so, I will keep my Barclays stake for its income stream, while patiently waiting for the share price to rebound!
Cliff D’Arcy owns shares in Barclays.
ITV
What it does: ITV is a UK media company that offers TV broadcasting. It has also begun to provide streaming and content creation services.
By Charlie Keough. A 33% decline in its share price across the last 12 months doesn’t bode well for ITV (LSE: ITV) shareholders. But now trading on just 8.5 times earnings, I think the broadcaster could be a bargain.
The business has been hit in recent times. The advertising industry is flagging. This was evident from ITV’s falling advertising revenues in the first half of 2023.
However, I’m not writing off the value stock just yet. I think there’s plenty to like. For example, its declining share price now means it offers a whopping 8.6% dividend yield.
On top of that, the firm is aware it needs to diversify. As a result, it has placed greater emphasis on its production arm, ITV Studios. In the first six months of 2023, revenues for this division were up 8% to £1bn. It’s also upped its investment into ITVX, its streaming platform.
I’ve had ITV on my watchlist for a while. I think March may be the month I snap up some shares.
Charlie Keough does not own shares in ITV.
PZ Cussons
What it does: PZ Cussons is a consumer goods company, which owns brands including Imperial Leather, St. Tropez and Sanctuary Spa.
By Andrew Mackie. Often, when sentiment in a stock is so low that’s the time to step in. I believe that’s the case with PZ Cussons (LSE:PZC) today. The latest body blow to its share price came in the form of a revenue downgrade following the devaluation of the currency in its biggest market, Nigeria.
Beyond this issue, clearly, the company has made a number of mistakes in the last few years, which it’s freely acknowledged. However, with a long history and deep expertise in consumer branding, I am confident it can bounce back.
In the UK, it has recently stepped up its marketing and communications both in print and digital to help set its brands apart in a crowded marketplace. One such initiative has been the launch of its first ever multi-brand full console arena display across 250 Sainsbury’s stores. Off the back of such initiatives, many of its personal care brands have begun witnessing a return to growth.
There’s no silver bullet when it comes to reviving this company’s fortunes. But then, no one gets to call the bottom on a stock. As it languishes at levels not seen since 2007, it’s a perfect time for me to take a contrarian stance.
Andrew Mackie owns shares in PZ Cussons.
Redde Northgate
What it does: Redde Northgate is a van hire and accident repair group, mainly serving SME and corporate customers.
By Roland Head. Redde Northgate (LSE:REDD) has benefited from tight supply conditions in the car and van markets over the last few years. The group’s hire fleet has been busy, and it’s also benefited from strong sale prices on ex-rental vehicles.
Meanwhile, a return to more normal road traffic levels following the pandemic have supported activity in the group’s accident management division.
The risk is that these favourable conditions are unlikely to last forever. Markets normally rebalance eventually.
City analysts do expect profits to ease slightly over the next couple of years. But I think a lot of bad news is already in the price.
Redde Northgate shares currently offer a 7% dividend yield and are priced in line with their tangible book value of 348p per share. In my experience, that’s unusually cheap for a business that appears to be in good health.
I think this FTSE 250 stock offers good value right now.
Roland Head does not own shares in Redde Northgate.
