Compared to their US counterparts, UK shares typically trade at significant discounts. And that can be good for investors looking for stocks to consider buying.
Finding value in the stock market is about more than price-to-earnings (P/E) multiples. But a couple of UK shares stand out to me as attractive for other reasons.
Anglo American
The Anglo American (LSE:AAL) share price has been volatile in 2024. That’s mostly the result of takeover interest from BHP waxing and waning at various points.
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While that doesn’t look to be on the cards (for now), the firm’s trying to divest its coal, platinum, and diamond units. This would leave its copper and iron ore divisions.
Focusing its operations in this way increases the risk of a downturn in copper prices. And this is especially significant with the US currently looking to focus on oil and gas over renewables.
There’s not much Anglo American or its shareholders can do about that. But the cash from divestitures should help offset short-term issues and I think the long-term outlook’s promising.
The company’s copper mines have relatively low production costs. And I think this is possibly the most important source of long-term differentiation for a commodities business.
That’s why I’ve been looking to add the stock to my portfolio. When the market-cap falls below £30bn, I think the company’s shares look like good value.
JD Wetherspoon
The JD Wetherspoon (LSE:JDW) share price has fallen 13% over the last month. The main reason is the UK Budget presents challenges for the company, as well as the wider industry.
Higher Employer National Insurance and an increased National Minimum Wage should both increase the firm’s costs. And this isn’t good for a business focused on customer value.
I think however, the market’s overestimating the threat here. Importantly, the challenge isn’t just one for the company specifically, but for the hospitality industry as a whole.
Having to increase its prices is unwelcome for JD Wetherspoon. But with other firms likely to have to do something similar, I expect it to be able to maintain its competitive position.
It’s easy to overlook the fact the business has been performing well lately. Sales have been increasing while a focus on cutting back on lease costs has caused margins and profits to rise.
I’m not convinced the market‘s fully appreciating the strength of the firm’s competitive position. And that’s why I’ve been buying the stock for my portfolio.
A common theme
Anglo American and JD Wetherspoon are very different businesses. But I think they’ve one thing in common, which is that their shares are good value from an investment perspective.
From my perspective, that’s the most important thing. Value can manifest itself in different ways, whether it’s a potential divestiture or a strong long-term competitive position.
Owning both in my portfolio adds some welcome diversification. And if the share prices stay where they are, I plan on buying more in the future.
