Every month, we ask our freelance writers to share their top ideas for value stocks with investors — here’s what they said for June!
[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]
Centrica
What it does: British Gas owner Centrica supplies energy to over 10m residential and business customers in the UK and Ireland.
By Charlie Carman. Centrica (LSE:CNA) is my best British value stock to consider buying in June.
With a price-to-earnings (P/E) ratio of just two, the company’s multiple looks highly attractive compared to most FTSE 100 stocks.
Plus, Centrica’s balance sheet looks healthy. With a £2.7bn net cash position today, the company has plenty of liquidity and a big financial buffer.
Admittedly, weaker wholesale gas prices in 2024 have weighed on the firm’s performance although there are signs prices are starting to rise again due to supply concerns.
In the long term, the business faces risks from a structural decline in UK gas usage. However, Centrica is already planning for the future, earmarking £600m-£800m to spend annually on renewable generation until 2028.
Overall, resilient earnings, a 2.9% dividend yield, and an ongoing £1bn share buyback programme all bolster the investment case. Adding the rock-bottom valuation to the mix, Centrica shares look tempting to me.
Charlie Carman does not own shares in Centrica.
Dr. Martens
What it does: Dr. Martens makes boots. 47% of the company’s sales come from wholesale, 28% e-commerce, the rest is retail.
By Stephen Wright. Shares in Dr. Martens (LSE:DOCS) have been up and down over the last few months. Mostly down, though.
The business has struggled since going public for two reasons. One is a tough environment and the other is its own operational issues.
There’s not much the company can do about the first. But I’m optimistic that conditions in the US – where Dr. Martens generates 43% of its revenues – will improve.
The second issue is one the firm is attempting to fix. While it does this, investors may have to be patient, but I think things can get better.
Speculation about the company being acquired has caused volatility in the share price. But I’d ignore that and focus on the underlying business.
I sold my Dr. Martens shares when the price hit 95p. After a fall back to 75p, though, I think they look like great value and I’m looking to buy them back.
Stephen Wright does not own share in Dr. Martens.
Shell
What it does: Shell is a global upstream producer and downstream marketer of oil, gas and energy products
By James Beard. For the four quarters to 31 March 2024, Shell (LSE:SHEL) reported adjusted earnings per share of $3.99 (£3.15). This means its trailing price-to-earnings ratio is 9 — lower than, for example, that of Exxon Mobil Corporation (13.5) and the FTSE 100 average (10.5).
It’s a similar story when it comes to assets. Shell’s price-to-book ratio is 1.2 — Exxon’s is 2.3.
Shell’s CEO blames some of this differential on an ‘unfashionable’ UK stock market and has threatened to move the company’s listing overseas.
Of course, energy prices can be volatile which makes earnings difficult to predict. And with a present yield of 3.8%, many other stocks pay more generous dividends.
But I’m sure rational international investors will soon realise that many UK shares — and Shell in particular — currently offer excellent value. That’s why it’s on my shopping list for when I next find some spare cash
James Beard does not own shares in Shell.
TBC Bank Group
What it does: TBC Bank Group provides banking services in the emerging markets of Georgia and Uzbekistan.
By Royston Wild. Shares in TBC Bank Group (LSE:TBCG) have fallen sharply due to political turbulence in the firm’s key Georgian marketplace.
Demonstrations in the country have ignited over the government’s plans to introduce a so-called foreign agents bill. The upheaval — and the tension it’s caused between Georgia and lawmakers in the US and EU — has raised fears over the direction of the country.
Could this uncertainty be baked into TBC’s share price following recent weakness, however? I think the answer could be yes.
Today the bank trades on a forward price-to-earnings (P/E) ratio of 4.4 times. It also carries a huge 8% dividend yield at current prices.
Fresh quarterly financial are a reminder of TBC’s massive growth potential. Pre-tax profit leapt 15.8% between January and March as its loan book continued to grow.
On balance, I think the bank remains an attractive buy for long-term investors to consider.
Royston Wild does not own shares in TBC Bank Group.
