I’ve been loading up on dirt cheap value stocks lately, hoping to reap the rewards when markets finally rally. Given this year’s mostly underwhelming FTSE 100 performance, I’ve had plenty of opportunity to do so.
The year is drawing to a close and with inflation starting to show a meaningful slowdown, I think we could enjoy a traditional Santa rally over the next few weeks. Now I’m suffering from a fear of missing out. I’m pretty spent up but if I can raise some cash before Christmas, I’d love to add the following three stocks to my portfolio.
Power of three
I love a monster dividend and they don’t get bigger than the blockbuster 10.9% yield on offer from Phoenix Group Holdings (LXE: PHNX). Yes, I know a double-digit yield is risky as hell. This one is almost twice as high as the company’s P/E ratio of 5.69 times earnings, which doesn’t happen often.
Yet Phoenix is flush with cash. On November it hiked its 2023 cash generation targets to £1.8bn, up from around £1.3bn to £1.4bn. CEO Andy Briggs called Phoenix “the UK’s leader at delivering cost and capital synergies and generating value for customers and shareholders”, which sounds like fighting talk to me.
The Phoenix share price has fallen 22.2% over the last year but a Santa rally could put a spring in its step. Even if it doesn’t, the yield alone will double my money in less than a decade. If it holds
Mining giant Glencore (LSE: GLEN) also looks incredible value trading at just four times earnings. I’ve bought its shares twice this year, on 26 July and 1 September. So far I’m slightly down, but no matter. Like all the shares I own, I buy with a minimum 10-year view. That gives me plenty of time for the Glencore share price to come good.
I’m keen to buy shares
The natural resources sector is one of the most cyclical, which means I’d rather buy when share prices are down. Which is handy, given that the Glencore share price has slumped 19.4% over 12 months.
Again, I’m not expecting an immediate recovery. The bad news keeps coming out of China, the world’s primary consumer of metals and minerals. But that’s fine. With a forecast yield of 7.4% I’m happy to keep reinvesting my dividends while I wait for the good times to roll around. I’d just like to top up my stake, before they do.
It’s odd to think of British Gas owner Centrica (LSE: CNA) as a value stock, given that its shares are up 55.45% so far this year. Yet trading at 4.22 times earnings, it still looks fantastic value to me.
There are mixed views on how Thursday’s OPEC+ meeting will affect oil supply. Yet it wouldn’t take much disruption to drive the oil price back up again, which would boost Centrica’s coffers and the share price.
The company has been making huge sums lately, with 2022’s first-half loss of £1.1bn transformed into a £6.5bn gain. I thought I’d missed my opportunity but with the stock dipping 5.51% over the last month, now could be a good entry point. Again, I just need the cash. Let’s hope the Santa rally waits until I’ve got it.
