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3 Bargain Basement Stocks: BHP Billiton plc, Prudential plc And CRH PLC (UK)

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BHP Billiton

It’s little wonder that shares in BHP Billiton (LSE: BLT) (NYSE: BBL.US) are dirt cheap at the present time. After, all iron ore is near to a ten-year low, the price of oil has fallen heavily, while most other commodities are also suffering from severe price falls, too. So, the fact that BHP has good diversification counts for little at the moment, which has caused its share price to fall by 25% in the last year and means that BHP now yields a whopping 5.6%.

This high yield indicates that its shares offer good value and, furthermore, they are expected to yield an incredible 6.1% next year. As a result, now seems to be a great time to buy them, with the long term outlook for commodities likely to be far brighter than it has been in the past, with an improving global economy and the potential for Chinese stimulus likely to push BHP’s shares upwards.

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A key attraction of Prudential (LSE: PRU) (NYSE: PUK.US) is its superb growth profile. Unlike most other insurance stocks, it has been able to post five successive years of profit growth, with the next two years set to see this trend continue. In fact, Prudential’s bottom line is expected to be 28% bigger in 2016 than it was in 2014, which would represent an impressive result.

Despite this, Prudential still trades at a very appealing share price. Certainly, its near term future may be somewhat uncertain given the change in CEO, but its price to earnings growth (PEG) ratio of just 1.1 indicates great value for such a top quality business. As such, its share price looks set to rise at a brisk pace.


With low interest rates set to stay over the medium term, construction-focused stocks such as CRH (LSE: CRH) look set to benefit from an economic tailwind. In fact, the company’s bottom line is forecast to almost double over the next two years, which places it as one of the fastest growing stocks on the FTSE 100 at the present time.

And, while CRH does trade on a rather rich rating of 21.3, this equates to a PEG ratio of just 0.5, which makes CRH appear to be a bargain when its growth potential is taken into account. And, with its shares currently yielding 2.6% from a payout ratio of 55%, it could become a strong income play if the additional earnings are used to increase shareholder payouts at a rapid rate, too.

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Peter Stephens owns shares of BHP Billiton and CRH. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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