⦁ Stocks that have strong underlying fundamentals but are trading below their intrinsic value are called value stocks.
⦁ There are many stocks on LSE, which could be ideal for investors looking to invest in domestic markets.
In the present circumstances, when the UK markets have not shown much momentum in the past one year, there are many value stocks on the London Stock Exchange (LSE), which could be ideal for investors looking to invest in domestic markets.
Basically, stocks with solid fundamentals but trading at a low stock price are termed value stocks. Such stock tends to have a potential upside and offer good return opportunities to investors.
The current stock price of the listed companies is known as its market value, while the value derived by studying the company’s fundamentals and using valuation methods is termed intrinsic value. In an ideal market condition, the company’s stock price is equal to its intrinsic value. At the same time, the stock which has strong underlying fundamentals but is trading below its intrinsic value is called a value stock.
Here is the list of the UK-listed value stocks that could offer potential upside and has good investment prospects:
HSBC Holdings Plc (LON: HSBA) FTSE100 listed company is one of the largest financial institutions in the world, which operates in over 64 countries and offers various financial products to its customers. The company has solid fundamentals and has diversified its business to different segments and locations. Economic recovery across the globe after the Covid-19 pandemic might lead to more loan disbursement both to the businesses and individuals that might benefit the company. Also, the company has a regular dividend pay-out policy and paid an interim dividend of 5.194p per share to eligible shareholders recently. HSBC Holdings Plc’s current market cap stands at £80,276 million, while its current dividend yield was 5.1% as of 6 October 2021.
ITV Plc (LON: ITV) The company offers various high-quality content through its free to air channels. It also offers advertising and subscription services to its clients.
The company operates in the media segment offering content that is viewed by millions of viewers across different platforms. The company generates major revenue through brand advertisements on its network of channels. During the six months ended 30 June, the company declared total revenue of £1,826 million, out of which advertising revenue was at £866 million, a rise of 29% compared to the same period last year.
The revival in the economy after the pandemic and high competition amongst companies might push the businesses to spend higher on ads and marketing, which indirectly will benefit the ITV business in terms of revenue and profitability.
ITV Plc’s current market cap stood at £4,268 million, while its current dividend yield was 3.1% as of 6 October 2021.
Polymetal International Plc (LON: POLY) The company operates in the exploration and production of precious metals. Its principal mining assets are located in Russia and Kazakhstan. The company is engaged in the exploration of gold and silver across its various mining projects. A rise in international gold and silver prices are likely to benefit the company’s revenue. During the first half of 2021, the company’s average realised gold price was at USD 1,793/oz, while the average realised silver price was at USD 26.5/oz. Polymetal International Plc’s current market cap stands at £5,874 million, while its current dividend yield was 8.0% as of 6 October 2021.
Persimmon Plc (LON: PSN) The company operates in the housebuilding sector. It offers residential houses under various brand names. The housebuilding segment in the UK has seen significant demand revival following the stamp duty holiday of the UK government. Persimmon Plc has witnessed a revival in terms of new home completions and higher revenue. During the half-year ended 30 June 2021, the company reported revenue of £1.84 billion and delivered 7,406 homes to its buyers. The company’s revenue is expected to grow in the coming quarters as it has strong order book and forward sales. Persimmon Plc current market cap stands at £8,213 million, while its current dividend yield was 9.1% as of 6 October 2021.
Rolls-Royce Holdings Plc (LON: RR.) FTSE100 listed company operates in the aerospace and defence sector. It develops and manufactures engines for the airline’s companies, while its defence segment offers engines and engineering services for submarines and other military services.
Ease in travel restrictions and demand revival in the airlines industry is expected to benefit the company as the aerospace engines and maintenance contracts contribute a significant part of the company’s revenue.
Also, the company is restructuring its businesses by selling a stake in certain companies like recent stake sales in Airtanker Holdings and ITP Aero. The company plans to generate at least £2 billion through stake sell in various businesses and rebuild its balance sheet.
Rolls-Royce Holdings Plc’s current market cap stands at £12,052 million as of 6 October 2021.