The FTSE 100 has staged a small recovery from its recent market crash. However, the index is still down around 25% year-to-date. Some stocks are stuck with even more significant declines.
Therefore, while some companies have seen a substantial recovery in their shares over the past few weeks, there’s still a wide range of stocks that trade on low valuations. Over the long run, these investments could offer recovery potential and yield high returns for investors.
With that in mind, here are my top three FTSE 100 value stocks to buy now.
FTSE 100 value stocks
Aviva (LSE: AV) recently told shareholders it wouldn’t pay them a dividend in June. Instead, the firm is potentially delaying it until the fourth quarter of 2020. This is disappointing. But it could be an excellent opportunity for long-term investors.
Having fallen by 47% since the start of the year, Aviva’s share price appears to offer a wide margin of safety. It now trades on a price-to-book (P/B) ratio of around 0.6, which is relatively low compared to many of its industry peers. The insurance industry P/B sector average is 1.1.
Because Aviva is one of the UK’s largest pension managers, its financial performance is likely to be less impacted by the current lockdown than many of its FTSE 100 index peers.
And while the firm has put dividends on ice for when things return to normal, the company’s yield could hit 13%. This suggests the stock could offer excellent value for money as well as an attractive income return.
Shares in Barclays (LSE: BARC) have fallen around 55% since the beginning of the year. Investors have been dumping shares in the FTSE 100 bank due to the uncertain economic outlook facing the wider industry.
A combination of weak business confidence and low-interest rates could hit the bank’s earnings and lead to losses in the near term. However, Barclays’ strong balance sheet puts it in a relatively stable position to overcome the current economic uncertainty.
Even though its recovery may not be smooth or swift, Barclays is now trading at one of its lowest levels since the darkest days of the financial crisis. Shares in the bank are dealing at a P/B ratio of 0.2, half of the banking sector average.
With this being the case, the stock appears to offer a wide margin of safety. These numbers suggest Barclays could deliver an attractive return for long-term investors from current levels.
M&G (LSE: MNG) has seen its share price slide 47% year-to-date. The FTSE 100 asset and pension manager’s outlook is highly uncertain at present. However, it has a substantial amount of cash and a solid balance sheet. This should provide some protection against the unprecedented challenges facing the financial services sector.
Looking ahead, the asset manager’s shares could remain unpopular among investors in the short run. But M&G’s size, as well as its reputation among investors around the world, should help it weather the storm and generate a strong recovery when things return to normal.
What’s more, unlike many of its peers, M&G hasn’t yet announced a dividend suspension.
After recent declines, the stock offers a yield of 14%. It’s also trading at a discount P/B of 0.6, providing a wide margin of safety as well as income appeal at current levels.
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Rupert Hargreaves owns shares in M&G PLC. The Motley Fool UK has recommended Barclays. 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.