“Be greedy when others are fearful, and fearful when others are greedy” – Warren Buffett
As the EU referendum debate rages on, share prices remain in the doldrums. Continuing uncertainty will mean global stock markets may go through a bumpy patch. But with so many worries in markets, this may be the ideal time for clever and patient contrarians to buy into stocks.
So I have scanned the FTSE 100 and FTSE 250, and here is an unloved banking giant, a telecoms firms, and a mid-cap builder that might just be the perfect addition to your investment portfolio.
Ever since the Credit Crunch the banks, including Barclays (LSE: BARC), have taken a battering through a combination of bad debt, scandals and immense reputational damage.
Not surprisingly, earnings have fallen through the floor, and whereas in the past these firms made multi-billion pound profits, now they barely break even. That has led to a share price that has been bumping along the bottom for what seems to be an age. A recent pull back has meant that Barclays shares are as cheap as they have been since the Eurozone crisis of 2011.
But many investors are sensing an improvement in the health and profitability of the UK banks. Although Barclay’s share price may never again reach the highs of yesterday, a gradual return to profitability is on the cards. Analysts predict a 2016 P/E ratio of 12.36. This could be a great time to buy.
TalkTalk Telecom Group
TalkTalk Telecom (LSE: TALK) offers low cost, no frills telecoms, broadband and television services to millions of UK customers. One of its key offers is a quadruple play of TV, broadband, phone and mobile. It has seen rapid growth in recent years, with earnings per share expected to go from 3.00p in 2014 to 14.65p in 2018. That is a rapid rate of expansion. Seen in that light, a 2016 P/E ratio of 18.92 is very reasonable.
But while TalkTalk has always been seen as a growth play, it is also an income stock, with the 2016 dividend yield expected to be 4.68%. After a long bull run, the share price has pulled back sharply in recent months, meaning this could be the ideal time to buy.
Galliford Try (LSE: GFRD) is a house builder and housing developer across the South and East of England. This mid-cap maestro has shown an impressive progression in its business over the past few years.
Revenues have been going from strength to strength, and EPS has jumped from 69.80p in 2013 to a predicted 153.83p in 2017. If Galliford Try can live up to analyst’s expectations, then this company is an outstanding bargain.
After a long upward climb, the share price has been sliding lower. But canny contrarians will know that this is the perfect time to grab a stake in this buzzing business. A 2016 P/E ratio of 10.12 looks enticingly cheap, and there is also a 6.23% dividend yield that could boost your portfolio even more.
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Prabhat Sakya has no position in any shares mentioned. 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.