Share prices are soaring again across the FTSE 250 as hopes of interest rate cuts intensify. At 20,164.54 points, the UK’s mid-tier share index is now sitting at 14-month highs.
The FTSE 250‘s printed significant gains over the past six months, as the chart above shows. Yet despite this, the index remains packed with top bargain stocks for investors to consider.
An investing opportunity
Why’s this important? Over the long term, value stocks have historically outperformed growth shares. This is because — as the market corrects and a cheap company’s true value’s recognised — the stock price can increase dramatically.
Theoretically, this gives them more scope to rise than growth stocks, which may have already experienced significant price appreciation.
Investing in value shares can also carry risk however. Certain companies carry cheap valuations for good reason, and it’s possible their share prices may never recover.
This is why conducting proper research and analysis is essential. If done properly, investing in value shares can help individuals make substantial, market-beating returns.
Stunning value
Primary Health Properties (LSE:PHP) is a FTSE 250 share I already hold in my Stocks and Shares ISA. And at current prices of 94.45p per share, I’m considering upping my stake.
This company invests in primary healthcare properties across the UK and Ireland. And today it deals on a price-to-book (P/B) ratio of 0.9. So it trades at a discount to the value of its assets.
Primary Health also carries a price-to-earnings (P/E) ratio of 13.5 times. Historically, the company has traded on a multiple in the low-to-mid 20s.
Finally, the business has a forward dividend yield of 7.5%. This is thanks in part to real estate investment trust (REIT) rules. These say the firm must pay at least 90% of annual rental profits out in the form of dividends.
Property stocks like this may suffer if interest rates remain at elevated levels. This could impact net asset values (NAVs) and, as a consequence, group earnings. But at current prices, I still think it’s a top buy.
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Another great bargain
I’m also paying ITV (LSE:ITV) close attention in my quest to find value stocks. Like Primary Health, this former FTSE 100 share seems to offer excellent all-round value at 94p.
Okay, a P/B ratio of 1.6 times suggests it trades at a premium to the value of assets. But on the other hand, its forward P/E ratio stands at just 8.5 times.
Meanwhile, its price-to-earnings growth (PEG) ratio is 0.9. Like the P/B ratio. A figure below 1 indicates that stock’s undervalued.
Lastly, the dividend yield on ITV is 6.9% for 2024. So you can say it offers some of the best value on the FTSE 250 today.
The outlook for the UK advertising market remains uncertain as the economy toils. But this is more than baked into ITV’s rock-bottom share price, in my opinion.
