I’m considering the value appeal of shares in Barclays PLC (LON:BARC) (BARC.L), Carillion plc (LON:CLLN) (CLLN.L), Whitbread plc (LON:WTB) (WTB.L), Vodafone Group plc (LON:VOD) (VOD.L) and British American Tobacco plc (LON:BATS) (BATS.L).
With Barclays having a single-digit prospective P/E, I think the stock could have investment potential for the long run. I’m of the view that the banking sector is undervalued at the moment. With Barclays having completed its restructuring and now in a stronger position financially than it was a couple of years ago, I feel it could have significant investment appeal.
British American Tobacco’s P/E of around 16 is relatively low in my view. That’s because the company has a relatively stable growth outlook in my eyes. It has scope to raise prices on its products due to a high degree of customer loyalty. Similarly, e-cigarettes look set to deliver 20%+ CAGR in the next few years which could push British American Tobacco’s EPS higher.
Whitbread has a strong position within its core UK market in my view. The Costa and Premier Inn brands have significant customer loyalty and could be able to perform well versus peers even though consumer spending is coming under pressure as inflation rises. The installation of more Costa Express machines outside of the UK provides another growth catalyst in my eyes which could boost Whitbread’s share price.
Vodafone is a surprisingly strong growth stock in my view. The company is forecast to increase its EPS by 21% next year which gives it a PEG of 1.2. For a stock which yields over 6% and has a diverse range of operations, I think this represents good value for money. I like Vodafone’s focus on expanding its range of products and its investment in its network. Both of these moves could improve its financial performance in my eyes.
Carillion is a stock I’ve been watching for a while, but I’m not ready to buy it at the moment. I think it may offer good long-term value, but it faces a very uncertain future. The company’s recent update showed just how challenging its outlook is, and I think it will take time for its management team to turn things around. Therefore, while relatively cheap, I think there are better value options for me than Carillion available elsewhere.