Stock market

3 cheap shares that missed out on the recent FTSE rally and still look very valuable to me.

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gave FTSE 100 8,000 away. But it still has a lot of very cheap shares, and it’s my favorite type.

I am surprised to see. Barclays (LSE: BARC) is trading at a low price-to-book ratio of just 6.8 times earnings, with a price-to-book ratio of just 0.4. The stock has been bullish recently, up 23.13% in three months, and 27.17% in 12 months.

I think investors are being unduly skeptical of FTSE 100 banks, as they are turning into money-making machines again. In February, Barclays posted a 6% drop in pre-tax profit for 2023, but still made £6.55bn.

High value stocks

It delighted investors by announcing £2bn of overall efficiency savings by 2026. And it plans to return at least £10bn to shareholders through dividends and share buybacks.

Barclays is still a big, sprawling operation, and underfire CEO CS Venkatakarnan has a tough job turning it around. If interest rates start to fall, his task may become more difficult, as this will reduce margins. Still with a long-term view, and a forecast yield of 5.2% covering 3.5 times earnings, I’m looking to add it to my portfolio while I have cash left over.

gave B.P (LSE: BP) shares have fallen 3.96% over the past year. This was perhaps inevitable, as energy prices fell. The stock has gained 8.47 percent in the past month, however, as tensions in the Middle East have increased over the price of oil. Yet it still looks cheap trading at 7.37 times earnings.

BP seems to have seen the immediate threat from a net-zero energy transition. It is clear that switching to renewables will take time. But oil prices could fall if tensions in Gaza ease (as all hope) or the global economy turns into turmoil, while BP’s output is not at 4.42%.

However, this is a cyclical stock, and I’d rather buy when it’s down than up. Which seems to be happening today.

Another recovery game

The housebuilding sector has missed out on recent FTSE 100 gains, as property prices fall and hopes of interest rate cuts fade. gave Barratt Developments (LSE: BDEV ) share price has fallen 15.02% over the three months, and is almost flat for the year.

Barratt’s share price has also been hit by a mixed reaction to the smaller rival’s takeover of all its shares. Redrow for £2.5bn. The added uncertainty sounds like an opportunity to me. The new group will have a combined value of more than £7bn, and a pipeline of 92,300 homes plus £800m of net cash on its balance sheet.

The UK economy and property prices are still shaky, and house sales could slow if mortgage prices remain flat. Also, there is a risk that the redo merger could be torpedoed by regulators. Yet Barratt shares appear to be trading dirt cheap at just 6.9 times earnings. And I would like to add them to my portfolio before they become too expensive.


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