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2 great value stocks for successful investors

British Airways owner International Consolidated Airlines (LSE: IAG) has been one of the FTSE 100’s biggest winners over the past year gaining around 70% in just 12 months. But with the share price on course to breach 20-year highs later this year, how much further can this popular blue chip really go?

More traffic

Only last week, the group which also owns airlines Iberia and Vueling, as well as Irish flag carrier Aer Lingus posted some very encouraging traffic statistics for the month of June. Group traffic as measured in revenue passenger kilometres, increased by 3.9% to 22,878, compared to 22,021 a year ago, with overall capacity measured in available seat kilometres rising by 3.5% to 27,127.

Meanwhile, the passenger load factor, which measures how full flights are, edged higher from 84% to 84.3% for the month of June, helping to raise the overall load factor from 80% to 80.9% for the first half of the year. The total number of passengers carried last month climbed to 9,752, a 3.2% improvement from 2016, bringing the total number of passengers to 48,806 so far in 2017, 4.6% higher than the same period a year ago.

Brexit

The airline industry and the travel industry as a whole have been facing challenging times of late, with political and economic uncertainty, Brexit, and the subsequent volatility in the currency markets weighing heavily on many London-listed carriers. But International Consolidated Airlines has responded well, with cost-cutting and structural changes helping the group to increase profitability despite the recent challenges facing the industry.

This outperformance hasn’t gone unnoticed by the market, with the share price being propelled to 637.5p – the highest since 1998. But I believe the shares still offer good value for bargain hunters, with the P/E ratio at a lowly 7.4 for the current year to December, and falling to just 6.9 for 2018.

Housing shortage

Meanwhile, another London-listed firm easily outperforming the market over the past year is Redrow (LSE: RDW). The Flintshire-based housebuilder has seen its share price rise by no less than 80% over the past year and surpass the previous all-time high of 548p over a decade ago.

The FTSE 250-listed developer may be trading at record highs, but in my view the share price still has further to go. Don’t get me wrong, I’m not denying that recent political and economic turmoil brought about by Brexit will weigh heavily on the minds of potential investors. But I believe the continuing housing shortage will mean that housebuilders such as Redrow will see a steady increase in demand over the coming years, albeit at a slower pace.

And with analysts’ consensus estimates suggesting an 8% increase in underlying earnings over the next couple of years, I believe the firm still offers excellent value trading at a very appealing multiple of just eight times forecast earnings.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Redrow. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.