Recent financial market volatility presents a great buying opportunity for lovers of value stocks. The panic of the past week has left many quality UK shares trading much lower alongside more vulnerable businesses.
Here are a couple of top value stocks I’m considering buying for my own portfolio today.
Begbies Traynor
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Insolvency specialist Begbies Traynor (LSE:BEG) is the sort of company that should benefit from a banking industry storm. As economic conditions worsen, the number of firms seeking its assistance could balloon.
Yet this AIM share has also plummeted in value of late. As a consequence it now trades on a forward price-to-earnings (P/E) ratio of 12.6 times.
In fact things look good for Begbies even if the banks avoid a meltdown. This is because the volume of businesses unfortunately experiencing significant financial distress is already rising strongly.
Latest data from the Insolvency Service showed the number of corporate insolvencies leap by almost a fifth (17%) year on year in February.
I also like Begbies Traynor because of its ambitious acquisition-led growth strategy. Earnings have grown steadily in recent years thanks to steady investment. And pleasingly the company has plenty of balance sheet strength to continue building scale.
The firm’s net debt to EBITDA ratio sat at a rock-bottom 0.2 as of December. This gave it the firepower to make a £400,000 acquisition (of chartered surveyors Mark Jenkinson & Son) last month, a move boosting its footprint in the city of Sheffield.
Begbies Traynor’s earnings could grow slowly during any economic upturn. Yet I believe the fruits of its acquisition strategy might still make it a top buy for long-term investors.
Airtel Africa
Telecoms and financial service business Airtel Africa (LSE:AAF) is another value stock on my radar today. The FTSE 100 company trades on a forward P/E ratio of just 8.4 times right now.
The company also offers great value when it comes to passive income. Today its dividend yield sits at an index-beating 4.6%.
As its name implies, Airtel is focussed on fast-growing African economies. The trouble is that the competition it faces is increasing rapidly as companies pile in to capitalise.
Fellow FTSE share Vodafone is one big beast threatening the company’s revenues prospects. This industry heavyweight operates the M-Pesamobile money division as well as traditional telecoms services, providing a double threat to Airtel.
Yet the rate at which the market is tipped to grow still makes Vodafone’s smaller rival an attractive stock in my opinion. Network operator World Mobile says that telecoms will be Africa’s fastest-growing sector over the next five years.
As a possible investor I’m encouraged by the pace at which Airtel is growing its subscriber base, too. It had 138.5m customers on its books at the end of December, up 10.1% year on year.
The company is also expanding its mobile money and data business across Sub-Saharan Africa to give subscriber numbers an extra boost. I think profits here could rise strongly in the coming decades.
