The Motley Fool

3 Bargain Buys? Barclays PLC, Savills plc And Dart Group PLC

Today’s update from estate agent Savills (LSE: SVS) is highly positive since it shows that the company is set to beat expectations for the year to 31 December 2015. It experienced a strong finish to the year, with Savills completing a number of significant commercial transactions across its global footprint.

Furthermore, Savills’ investment management division also completed the sale of the Berlin Potsdamer Platz assets on behalf of the SEB Immoinvest Fund. This occurred earlier than expected, thereby leading to a stronger-than-anticipated performance from the investment management division in 2015.

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Looking ahead to 2016, Savills has maintained its current guidance. It’s expected to post a rise in its bottom line of 10% for the full-year, with market fundamentals due to remain sound in spite of heightened uncertainty over global economic prospects.

With the company’s shares trading on a price-to-earnings growth (PEG) ratio of 1.4, they appear to offer good value for money. And with Savills having such a geographically diversified business, it has the capacity to overcome short-term challenges in one or more regions in the short run. Therefore, it appears to be a sound long-term buy, although its business remains relatively cyclical and its shares are likely to remain volatile in the coming months.


Another cyclical stock that appears to be worth buying is Dart Group (LSE: DTG). It’s benefitting from an improved economic outlook, with the travel company having posted double-digit increases in its bottom line in each of the last five years.

Looking ahead to the current year, Dart is expected to increase its bottom line by a highly impressive 64%. This puts it on a forward price-to-earnings (P/E) ratio of 11, which indicates that it offers excellent value for money and could benefit from an increase to its rating over the medium term.

Certainly, there’s a risk that Dart will be hurt by interest rate rises, since the impact of higher mortgage, credit card and other debt repayments could squeeze household spending levels. And with inflation unlikely to remain near zero in the coming years, real-term wages growth could also come under pressure and impact negatively on consumer spending levels.

However, with such a low valuation and a relatively resilient business model, Dart seems to offer a highly appealing risk/reward ratio for the long term, and therefore appears to be worth buying at the present time.

Bag a bargain?

Similarly, Barclays (LSE: BARC) also trades on a super-low valuation. It has a price-to-book value (P/B) ratio of only 0.6 which, for a global bank that has been highly profitable in recent years, seems to be an extremely low price to pay.

That’s because during the credit crunch there were major concerns about significant writedowns to the values of assets held on banks’ balance sheets. But today the prospect of that taking place seems to be rather slim. Certainly, economic challenges lie ahead, but they’re unlikely to merit such a low valuation over the coming years – especially with Barclays performing relatively well and being expected to increase its bottom line by 21% in the current financial year.

In addition, Barclays is set to yield 4.1% in 2016, which makes it an appealing income play. This, plus its low valuation and upbeat growth prospects, makes it a very strong buy for 2016 and beyond.

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Peter Stephens owns shares of Barclays and Dart Group. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.