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3 Bargain Stocks I’m Loading Into My ISA

With only one trading day left before the end of the tax year, time is running out for ISA investors wanting to maximise their tax-free investments.

I’ve been digging deep into the FTSE 100, looking for classic value buys, which will pay me a decent dividend and provide the chance of market-beating capital gains — and I reckon I’ve struck gold.

To find out what I’ve been adding to my ISA recently, read on.

barclays1. Barclays

The facts are simple: Barclays (LSE: BARC) (NYSE: BCS.US) trades at a 14% discount to its tangible book value and has a forecast P/E of just 8.5.

Analysts expect the bank’s dividend to rise by a massive 43% this year, to 9.3p, giving a prospective yield of 3.8%.

I believe Barclays is a classic value opportunity — a cheap, profitable, but unpopular business, that’s in the middle of a turnaround, and could deliver big gains in 2014.

2. Tesco

TescoTesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) shares are currently trading at around 290p. They haven’t been this cheap since the depths of the 2008 financial crisis.

Admittedly, Tesco does have some problems, but it’s working hard to address these. Tesco recently unveiled new plans to integrate its online and in-store businesses far more closely, and explained how online customers also tend to buy much more in store.

I believe Tesco’s scale, internet presence, and profitable grip on the home delivery market could spell trouble for the firm’s competitors. The supermarket giant retains a near-30% share of the UK market, and its shares currently trade on a P/E of just 10, with a yield of 5.0%. In my view, that’s a bargain.

3. Aviva

Aviva (LSE: AV) (NYSE: AV.US) took a big hit last week, when newspaper reports suggested that the Financial Conduct Authority might be about to launch a big investigation into historic sales of life insurance and other policies.

It was even suggested (including by me), that this could be the insurance industry’s PPI moment.

It now seems that the scale of the planned investigation was exaggerated, as were the risks of a PPI-style compensation binge. Aviva’s share price has recovered somewhat, but remains well below the 528p peak seen earlier in March.

Aviva shares are now trading on a 2014 forecast P/E of 10.5, compared to 12.5 for Legal & General and 13.5 for Prudential. If Aviva’s new management continue to successfully deliver on the firm’s turnaround plan, Aviva’s share price could be re-rated in-line with its peers, suggesting a price target of around 600p — 22% higher than the firm’s current share price.

I reckon that all three of these stocks are a buy, but before you hit the buy button, I'd recommend a closer look at the Motley Fool's latest income-generating report, "How To Create Dividends For Life".

This report includes five simple tests to weed out weak dividends, and explains why focusing on income could help you beat the market. To get your FREE copy of this report now, just click here.

Roland owns shares in Barclays, Tesco and Aviva, but not in any of the other companies mentioned in this article. The Motley Fool owns shares in Tesco.