The market price might not always fully reflect the intrinsic value of the company. If misjudged, capital gains might be on offer to savvy investors. Here, four Fool UK contract writers highlight a stock they each think investors ought to consider buying.
Land Securities Group
What it does: Land Securities Group is a REIT that leases a portfolio of properties including offices and retail parks.
By Stephen Wright. A lot of real estate investment trusts (REITs) trade at discounts to their net asset values. But one that I like the look of very much is Land Securities Group (LSE:LAND).
The firm hasn’t seen the growth that some other REITs have experienced recently, but investors need to be careful here. In a lot of cases, REITS have financed growth by issuing equity.
This reduces the value of existing shares, which can offset the growth in rental income. By contrast, Land Securities Group has been doing none of this.
Over the last decade, it has maintained a very stable share count. And I think adds some stability to a dividend that currently yields 7.5%.
The biggest risk with the company is interest rates and investors should keep in mind the threat of higher borrowing costs. But I’m impressed with the business and I think it’s worth considering.
Stephen Wright does not own shares in Land Securities Group.
OSB Group
What it does: OSB is a specialist mortgage lender and savings bank trading under brands including Kent Reliance and Precise.
By Roland Head. Specialist lender OSB Group (LSE: OSB) is on my radar as a stock to consider buying thanks to its modest valuation, solid recent trading and 7%+ dividend yield.
OSB shares currently trade at discount of around 25% to the lender’s last reported book value of £6. I think that could be too cheap, especially as the dividend appears to be well supported by earnings.
Admittedly, the bank’s exposure to the UK property market could lead to loan losses in the event of a bad recession. However, OSB is an experienced lender and is currently trading with a comfortable safety buffer of surplus capital.
Guidance for the year ahead suggests the bank’s loan book will return to growth in 2025. Lending profits are expected to generate a “low teens” return on equity (book value).
If management can deliver on this guidance, my analysis suggests the shares could deliver attractive returns for shareholders.
Roland Head has no position in OSB Group.
Safestore Holdings
What it does: Safestore Holdings is the UK’s largest self-storage provider, serving individuals and businesses across Europe.
By Mark Hartley. The price-to-earnings (P/E) ratio is a popular way to measure value but it doesn’t tell the whole story. It also pays to check the price-to-book (P/B) ratio, debt-to-equity (D/E) ratio and return on equity (ROE). These metrics gauge a company’s stability and growth potential.
Combining these metrics, I see that the real estate investment trust (REIT) Safestore Holdings (LSE: SAFE) is trading well below book value. It has a P/E ratio of 3.53, and a P/B ratio of 0.59 – both significantly below the average for UK stocks. With a D/E ratio of 0.42 and an ROE of 17%, it looks stable with decent growth potential.
However, rising interest rates are a risk as they can impact property valuations, leading to declines in the net asset value (NAV) or REITs. It also faces tough competition from rivals like Big Yellow and Lok’nStore.
Mark Hartley does not own shares in Safestore.
Vodafone
What it does: Vodafone is one of the world’s biggest telecommunications operators with operations spanning Europe and Africa.
By Royston Wild. Vodafone (LSE:VOD) looks dirt cheap across a variety of metrics. This includes its price-to-book (P/B) ratio, which — at 0.4 — is comfortably inside value territory of 1 and below.
The FTSE 100 firm also looks cheap relative to predicted earnings. City analyst think the bottom line will rise 17% in the financial year to March 2026, leaving Vodafone shares with a price-to-earnings (P/E) ratio of 9.3 times.
This also means the telecoms titan deals on a sub-1 price-to-earnings growth (PEG) ratio of 0.5.
Finally, Vodafone’s dividend yield for fiscal 2026 is a mighty 5.9%.
There are risks here for investors. The German marketplace remains troublesome following recent changes to bundling laws. The company also still has a lot of debt on its balance sheet (net debt was $31.8bn as of September).
However, I think Vodafone’s ultra-low valuation accounts for these dangers. I think it could be a great share to consider as restructuring efforts continue. I also like the excellent earnings opportunities created by its African operations.
Royston Wild does not own shares in Vodafone.
