4 undervalued shares? Next plc, easyJet plc, Boohoo Group PLC and Royal Mail PLC

Do these stocks offer improving growth prospects? Next plc (LON:NXT) (NXT.L), easyJet plc (LON:EZJ) (EZJ.L), Boohoo Group PLC (LON:BOO) (BOO.L) and Royal Mail PLC (LON:RMG) (RMG.L)

Royal Mail
Royal Mail

The valuations of Next plc (LON:NXT) (NXT.L), easyJet plc (LON:EZJ) (EZJ.L), Boohoo Group PLC (LON:BOO) (BOO.L) and Royal Mail PLC (LON:RMG) (RMG.L) may be relatively appealing in my opinion.

Next, for instance, has a P/E ratio of around 13 at the moment. The company faces an uncertain consumer outlook, but I believe that it could have the right strategy to successfully adapt to changing customer tastes.

The company is seeking to offer more leisure activities within its stores, as consumers gradually shift their spending from retail to leisure activities. It is also investing online, with its omnichannel presence set to deliver positive EPS growth in the next couple of years. While potentially volatile in the near term, I feel that Next could have a bright long-term future.

easyJet’s investment potential may seem to be lacking in the near term. After all, costs are rising across the industry, and there is a considerable amount of uncertainty surrounding Brexit in my opinion.

However, with a PEG ratio of around 0.9 and continued growth in its number of passengers, the FTSE 100 stock could generate improving investment performance. easyJet also has a large net cash position which could provide it with a strong foundation for future growth.

Boohoo’s change in management could lead to an improving strategy over the medium term in my view. It may be able to further develop its international presence, while continuing to offer product innovation and value for money for customers.

With a PEG ratio of around 1.6, I think the Boohoo share price could offer a margin of safety. With double-digit EPS growth forecast over the next two years, investor sentiment may improve even though the wider retail sector is enduring an uncertain period.

Royal Mail’s recent profit warning was disappointing. However, I think that the company’s investment in its international operations could yield improving financial results, with its GLS division growing volumes at a much faster rate than its UK operations.

With a dividend yield of around 5.5%, I feel that the Royal Mail share price could offer a margin of safety. While it may be volatile in the near term, I’m optimistic about its long-term recovery potential following today’s management changes.

About Robert Stephens 5138 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page