2 cracking value stocks investors should consider snapping up!

As UK markets seem to be regaining some confidence, our writer details two brilliant value stocks she reckons investors should be considering.

| 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.

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'

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.

I believe there are plenty of attractive value stocks on offer across the FTSE at present.

Two picks investors should consider buying are Centrica (LSE: CNA), and Safestore (LSE: SAFE).

Here’s why!

Should you invest £1,000 in Centrica right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Centrica made the list?

See the 6 stocks

Centrica

The owner of British Gas is a mammoth business that supplies over 10m residential and businesses with energy.

Centrica shares look like they’re beginning to gain momentum once more after a sharp drop in September last year. Over a 12-month period, they’re up 14% from 120p at this time last year, to current levels of 137p.

Created with Highcharts 11.4.3Centrica Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

From a bearish view, two issues concern me. Firstly, weaker wholesale gas prices could hurt performance, and potentially returns moving forward. I’ll keep an eye on this.

Next, the transition to renewable energy is an expensive endeavour. This shift could hurt shareholder returns as it takes a bite out of what currently looks like a healthy balance sheet. However, the business has already earmarked money for this upcoming change and looks to be preparing. Preparation is always a good sign for me.

From a bullish view, the shares look dirt-cheap to me right now on a price-to-earnings ratio of just 2! The average P/E ratio across the FTSE 250 index is closer to 12.

Next, the business offers a dividend yield of close to 3%. Furthermore, an ongoing £1bn share buyback scheme sweetens the investment case. However, I do understand that dividends are never guaranteed.

Centrica has the financial strength, brand power, and reach to be a potentially good buy, if you ask me. I’d personally be willing to buy some shares when I next can.

Safestore

As the largest self-storage provider in the UK, Safestore’s dominant market position and excellent track record are some of the main draws for me personally.

The shares have dropped 14% over a 12-month period from 979p at this time last year, to current levels of 889p.

Created with Highcharts 11.4.3Safestore Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I reckon a big part of this drop is the current economic pressures. As interest rates are higher, and inflation has been high, rental collection and property values have dropped. This is the biggest ongoing risk for the firm, especially as it is also putting money into an aggressive European expansion plan.

Another risk I’m wary of is a debt-heavy balance sheet. This debt could be harder to pay off during the current high interest environment, and hurt future growth and returns.

Speaking of expansion, Safestore is now the second-largest firm of its type on the continent. This is an exciting development. It’s where I feel Safestore could soar to new heights in the future. The reason for this is because the European storage market is much less developed, offering good growth opportunities.

Next, the shares look great value for money to me on a price-to-earnings ratio of just nine. Plus, a dividend yield of 3.4% is attractive to help build a passive income stream.

Like Centrica, Safestore is another stock I’d personally love to buy when I next can.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Safestore 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »