Down 54% and 19% in 2024, are these the best value stocks out there right now?

While the UK stock market has been flying, this Fool sees good value in these two shares. He’d buy them today if he had the cash.

| 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.

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’m always on the lookout for value stocks. And while the FTSE 100 and FTSE 250 have posted strong performances this year, I still see plenty of undervalued shares out there.

In fact, this year has proved to be difficult for a handful of Footsie stalwarts. Of those, I’ve been keeping a close eye on Burberry (LSE: BRBY) and BP (LSE: BP.). They’re two stocks that have been firmly on my radar over the past couple of months. With their share prices sliding, I reckon they could be the best value stocks out there. If I had the cash, I’d add them to my portfolio today.

Fashion giant

Let’s begin by investigating Burberry’s performance. Unfortunately for shareholders, this year has been terrible for the stock.

Should you invest £1,000 in BP 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 BP made the list?

See the 6 stocks

By far, the iconic British brand had been the worst performer on the FTSE 100. So much so that it recently got demoted to the FTSE 250. During 2024, it has lost 54.3% of its value. It’s down a whopping 66.4% in the last 12 months.

Created with Highcharts 11.4.3Burberry Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The reason for its poor performance has been multiple profit warnings. Clearly, they’ve sparked fear amongst investors. In its most recent update, Burberry said it now expects to post an operating loss in its first half. Moving forward, the business certainly faces a challenging turnaround mission.

But its shares now look dirt cheap. In fact, they’re sitting at a 15-year low. Today, I could pick up Burberry trading on a price-to-earnings (P/E) ratio of just 8.7. Its long-term historical average is around 22. So on paper, there’s plenty of value in the stock today.

Furthermore, while it will be challenging, I’m optimistic the business can turn itself around and it has already started to implement measures to reverse its fortunes.

For example, it parted ways with former CEO Jonathan Akeroyd and replaced him with Joshua Schulman, former CEO of Coach. In tandem with that, management has laid out plans for a cost-cutting programme.

Granted, Burberry’s turnaround won’t be a quick process. And it will face struggles along the way. However, I see long-term value in its shares.

Oil and gas powerhouse

BP has fared slightly better than the fashion firm. However, its share price is still down 18.8% year to date.

Created with Highcharts 11.4.3Bp P.l.c. PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Its recent struggles can be attributed to falling oil prices. And that highlights a risk with the stock: it’s cyclical. The BP share price tends to mirror the price of oil. For example, the stock soared in 2020 when the price of oil shot up. Of course, when prices fall, the reverse happens.

But there’s one positive to its declining share price. That’s the fact that it has pushed up its dividend yield. Its payout now stands at 6.1%. That’s comfortably above the FTSE 100 average.

To add to its impressive yield, the business has also committed to a $14bn buyback scheme running between last year through to the end of 2025. It’s on track to buy back $7bn this year. So, the firm is well on its way to achieving its target.

Another risk I see with BP is the energy transition. However, it’s now predicted that demand for oil will rise this decade. What’s more, BP shares look like cracking value, trading on a forward P/E of 6.5.

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.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry 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.

Pound coins for sale — 51 pence?

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

Can the Rolls-Royce share price hit £13 in the coming year?

After a stunning couple of years for the Rolls-Royce share price, can it keep up its recent momentum? This writer…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »