2015 is set to be a year of major change for Standard Chartered (LSE: STAN), with a new management team taking over and set to make changes to the bank’s operations. And, even though investor sentiment has improved year-to-date, with Standard Chartered’s share price rising by 12%, it still trades at considerably less than net asset value. In fact, Standard Chartered has a price to book (P/B) ratio of just 0.88, which indicates that its shares are very, very cheap.
And, with earnings growth of 14% forecast for next year and a dividend yield of 4.7%, Standard Chartered appears to not only be cheap, but also offer top notch income and growth prospects, too.
With the FTSE 100 comfortably pushing past 7,000 points, its price to earnings (P/E) ratio now stands at over 16. As such, BAE (LSE BA) seems to offer excellent relative value for money, since it has a P/E ratio of just 13.6. As a result, an upward rerating could take place over the medium term, with BAE’s improving outlook being an obvious catalyst to make this happen.
In fact, BAE is expected to increase its bottom line by 6% next year, which is in-line with the FTSE 100’s growth rate and shows that, while it has endured a challenging period during a time of cutbacks in defence spending in the developed world, now could be a great time to buy ahead of a rating expansion.
It’s clear from the results of house builders such as Taylor Wimpey (LSE: TW) that the sector is enjoying a purple patch. For example, its bottom line rose by 67% last year and is expected to increase by a further 29% this year and another 13% next year. As such, its shares have risen by an incredible 51% in the last year alone.
And, looking ahead, more gains are very realistic. That’s because interest rates are set to remain low for a number of years and demand for housing appears to be insatiable – even with the potential ‘speed bump’ of the General Election to come in the short run. Furthermore, with Taylor Wimpey having a P/B ratio of 2.1, it still seems to offer excellent value for money, too.
For braver investors, mining stocks offer a superb opportunity at the present time. Certainly, things could get worse before they get better, but they appear to offer huge potential for capital gains over the long run.
And, one of the best value mining stocks in the FTSE 100 is Fresnillo (LSE: FRES), with it trading on a price to earnings growth (PEG) ratio of just 0.4. This indicates that at its current share price it offers a very wide margin of safety so that even if commodity prices do come under pressure in the short term, it may not hurt the company’s share price as much as would normally be expected. And, looking further out, the wide margin of safety also means that considerable capital returns are on offer, too.
As a cyclical stock, the potential for an improved macroeconomic outlook for the Eurozone is likely to improve sentiment in British Airways owner, IAG (LSE: IAG). In fact, its shares have already started to move higher at a rapid rate, being up 23% since the turn of the year. However, they still offer excellent value for money and trade on a P/E ratio of just 11.5.
And, when this valuation is combined with IAG’s growth forecasts, it equates to a PEG ratio of just 0.3. This indicates that its share price could have much further to go and, while an increasing oil price could dampen sentiment and a faltering Eurozone economy may yet hold its share price back, IAG remains a superb longer-term play and, along with Fresnillo, Standard Chartered, Taylor Wimpey and BAE, is one of the best value stocks in the FTSE 100.
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Peter Stephens owns shares of BAE Systems, Standard Chartered, and Taylor Wimpey. 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.