Why I’m Surprised By The Valuations Of These 4 Shares: Royal Dutch Shell Plc, GlaxoSmithKline plc, Barclays PLC And Diageo plc

These 4 shares seem undervalued to me: Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L), GlaxoSmithKline plc (LON:GSK) (LSE:GSK.L), Barclays PLC (LON:BARC) (LSE:BARC.L) and Diageo plc (LON:DGE) (LSE:DGE.L)

Royal Dutch Shell Plc
Royal Dutch Shell Plc

I’m always on the lookout for undervalued shares. I think I’ve found 4 relatively cheap shares here. Their valuations surprised me because I think they may be worth more than the value the stock market is currently placing on them.

Shares in Barclays PLC (LON:BARC) (LSE:BARC.L) have a P/E of 11.2. In my opinion, that could rise in future years as the strategy of the bank has an impact on its income statement. I like the fact that Barclays has prioritised its balance sheet strength over its dividend. I feel this will create a better risk/reward ratio for investors in the long run. The outlook for the global economy may be tough, but I’m optimistic about Barclays’ relative performance in future.

I’m also surprised by the valuation placed on shares in GlaxoSmithKline plc (LON:GSK) (LSE:GSK.L). They have a P/E of 14.7 and I can understand why investors are being a bit cautious. The company is changing its CEO and this inevitably means some uncertainty in the short run. However, I think GlaxoSmithKline has a good growth strategy and a diversified business model, so I’m upbeat about its future.

Diageo plc (LON:DGE) (LSE:DGE.L) is another global stock I’m optimistic about. I like the alcoholic beverage sector because of what I call its ‘defensive growth’ characteristics. This means it has a good mix of defensive merits and growth potential in my opinion. I’m optimistic about Diageo’s strategy and I feel its brand portfolio is among the best around.

Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L) is one of my favourite oil stocks. I’m optimistic about the integration of BG and think the combined company will have a strong position within the Oil & Gas industry. It will also generate increasing FCF in my opinion, which could help to boost dividends per share. I think Royal Dutch Shell could rise on the back of a higher oil price, which makes its P/E of 15.1 seem good value to me.

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