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3 surprisingly cheap stocks: AstraZeneca plc, Darty plc and WS Atkins plc

Multi-channel electrical retailer Darty (LSE: DRTY) released a rather mixed update today, with it recording lower profit but higher sales ahead of its acquisition by Groupe Fnac. Darty’s top line rose by 3.9% on a like-for-like (LFL) basis as online sales made a positive contribution. However, the company’s bottom line fell by 13.7% as a result of writedowns made after business disruption in the Netherlands following the implementation of a new IT system.

As mentioned, Darty is being acquired by Group Fnac and it appears to be buying the business at a cut-price. Certainly, the outlook for electrical retailers is somewhat uncertain and the European economy in particular is enduring a prolonged period of slow growth. However, with Darty expected to increase its bottom line by 26% in the current year and by a further 42% next year, it seems to be firing on all cylinders. In fact, such a strong rate of growth puts Darty on a price-to-earnings growth (PEG) ratio of just 0.5, which makes it a rather cheap business at the present time.

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Discounted valuation

Also trading on a discounted valuation are shares in WS Atkins (LSE: ATK). The engineering and project management company today announced its full-year results, with its top line rising by 6% and underlying earnings being up 10.5% on a per share basis. This represents a significant improvement in the performance of WS Atkins’ UK and European segments, with two recent major transportation project wins in North America set to provide a boost to the company’s workload in the current financial year.

While Energy continues to be a tough space in which to operate for WS Atkins, its overall performance as a business remains sound. Looking ahead, it’s expected to grow its earnings by 5% in the current year and by 4% next year. While these rates of growth may not be particularly stunning, WS Atkins offers excellent value for money and the fact that its performance is improving could be enough to boost investor sentiment in the stock. And due to it having a price-to-earnings (P/E) ratio of 10.8, its shares could benefit from a substantial upward rerating over the coming years.

Bid potential

Meanwhile, shares in AstraZeneca (LSE: AZN) also continue to offer good value for money. They trade on a P/E ratio of 14 which, for a pharmaceutical major with a strong pipeline of new treatments, seems to be rather low.

Certainly, AstraZeneca continues to experience problems with its near-term financial outlook, with the company expected to report a fall in earnings in each of the next two financial years. However, this appears to be more than adequately priced-in and due to AstraZeneca having upbeat long-term growth prospects, its shares could begin to rise even if a bid approach isn’t received.

Clearly, AstraZeneca remains a company with bid potential. Its strong financial standing, excellent cash flow and rapidly evolving pipeline show that it remains a top quality business. Allied to this is a yield of 5.1%, which means that AstraZeneca’s total returns could be superb in the long run.

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