Let’s be honest, markets don’t exactly feel very reliable right now. For those hunting stocks to buy, flip-flopping prices are enough to make anyone throw in the towel and cash out.
But don’t give up just yet – because I’ve managed to uncover some hidden value on the UK market.
Seeking value in chaos
Wild oil prices driven by global tensions and shifting expectations are all feeding volatility. That’s helped push finance and mining stocks higher, while energy shares have been slipping. It’s a reminder that not every sector moves in the same direction at the same time.
But among the noise, I’ve identified three British value stocks that stand out: Barratt Redrow (LSE: BTRW), Burford Capital and GB Group.
Each is trading below what analysts think it may be worth, and each has a forecast share price rise of 66% or more over the next 12 months.
Barratt Redrow
Barratt Redrow looks like the classic cyclical recovery story. Analysts are broadly positive, with 13 of 19 rating it a Strong Buy with an average 12-month target 66% above the current price.
RBC Capital recently upgraded the stock to Outperform and raised its target from 350p to 425p — a strong boost of confidence from the broker.
The latest results are encouraging. Revenue is up 29% year on year and earnings have climbed 43%, helping support a very attractive dividend yield of 7%. The balance sheet also looks healthy, with minimal debt and a stable financial position.
But good results aside, housebuilding remains highly sensitive to interest rates. This threatens confidence in the wider housing market, which could hurt Barrett’s profits. So while the dividend is appealing, its slim coverage increases the risk of a cut.
Burford Capital
Specialising in legal finance, Burford Capital is even more popular with analysts. Five of six rate it Strong Buy, with an average 12-month target 107% above the current share price.
The business seems highly profitable, with an operating margin of 59.3% and a forward price-to-earnings (P/E) ratio of 5.5. Latest FY25 results reveal a strengthening business, with new definitive commitments up 39%, and a final dividend of 6.25c per share.
The risk is that litigation finance can be unpredictable, since returns depend on case timing and outcomes.
GB Group
GB Group is a smaller outfit with only five analysts covering it, but all give it a Strong Buy. The average 12-month target is 82% above today’s price.
The company also recently extended its share buyback programme by £10m and refinanced a £175m revolving credit facility through 2030.
Recent results show earnings up 10% year on year, and the balance sheet remains moderate with minimal debt. That gives it some financial breathing room — but doesn’t negate the small-cap risks.
With a market-cap below £500m, it’s more exposed to volatility and currently looks overvalued, with a P/E of 57.
The bottom line
When it comes to assessing value stocks, broker forecasts should be taken with a pinch of salt — especially when coverage is low.
While each of these stocks show promise, Barrett Redrow stands out for its combination of market confidence backed by strong performance. For investors looking to lock in some cheap shares while the market’s shaky, I think it’s one value play that’s worth considering.
