2 bargain shares you have to check out today

Royston Wild discusses two stocks he thinks are too cheap to ignore.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A slew of positive releases from the housing sector has dragged investor appetite for Inland Homes (LSE: INL) higher in recent weeks.

The construction colossus has added 8% in value since the middle of June. But despite this heady ascent, I reckon the AIM-quoted firm remains hugely undervalued by the market.

Inland Homes joined its peers in throwing out perky trading details on Monday, advising that the number of open market unit completions soared 27.9% in the 12 months to June, to 188.

Revenues are expected to come in line with expectations for the full fiscal year, it advised, at £90m. Without the exclusion of two land sales at Alperton, Greater London and Aylesbury, Buckinghamshire — to be shown as a gain on sale of subsidiary or joint venture — revenue would have risen to £117m, up from £102m a year earlier.

The Amersham-based business has invested huge amounts in its construction capacity over the past year, a programme that should deliver robust sales growth in the years ahead as home demand powers along.

Chief executive Stephen Wicks certainly painted an upbeat picture today. He said: “A record £1.34bn short-term development pipeline; the creation of a highly experienced construction team which enables us to capitalise on partnership opportunities; and growing private housebuilding along with land sales has resulted in a dynamic, multi-faceted business model which will stand us in good stead for the future.”

Inland Homes added that forward sales rose 11.5% year-on-year as of June, to £26.1m as of June, underlining the resilience of buyer appetite.

Ripping value

The City certainly believes Inland Homes is on the right track, and anticipates a 9% earnings rise in the present fiscal period. As a result, the company sports a very-cheap forward P/E ratio of 7.9 times, no little distance below the long-established bargain benchmark of 10 times.

A sub-1 PEG multiple of 0.9 rubber-stamps the homes giant’s brilliant value. And if this wasn’t enough, investors are also expected to enjoy a 1.8p per share dividend, a projection that creates a handy 3.1% yield.

While fears of a slowing economy on homebuyer demand continue to linger, I reckon these concerns are more than baked into Inland Homes’ share price right now. Besides, the company’s emphasis on the more-affluent South and South East of England provides an added protective buffer should times become tough.

Global superstar

Informa (LSE: INF) is another grossly-undervalued growth stock, in my opinion, particularly as its improved international presence following recent expansion in the States, and a steady raft of product introductions, lights a fire under the top line.

In 2017 the publisher and events organiser is expected to deliver a 12% earnings advance. And another 7% rise is forecast for next year.

These estimates leave the FTSE 100 giant dealing on a prospective P/E ratio of 14.2 times, below the British big-cap average of 15 times. And Informa also carries a very undemanding PEG rating of 1.2.

When you throw a chunky 3% dividend yield into the equation too (created by a forecast 20.3p per share dividend), I reckon the London business is worthy of serious attention.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Inland Homes. 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.

More on Investing Articles

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Is the S&P 500 going to 10,000 by 2030? This expert thinks so

One stock market strategist sees animal spirits taking hold and driving the S&P 500 index even higher by the end…

Read more »

Investing Articles

I’m expecting my Phoenix Group shares to give me a total return of 25% in 2025!

Phoenix Group shares have had a difficult few months but that doesn't worry Harvey Jones. He loves their 10%+ yield…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

14.5bn reasons why I think the Legal & General share price is at least 11% undervalued

According to our writer, the Legal & General share price doesn’t appear to reflect the underlying profitability of the business. 

Read more »