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.

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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.

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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.

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p 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 10%, 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

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.

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