Best British value stocks to buy in April
Every month, we ask our freelance writers to share their top ideas for value stocks to buy with investors — here’s what they said for April! [Just beginning your investing journey? Check out our guide on how to start investing in the UK.]
Barclays
What it does: Barclays is a UK high-street bank, with an international investment banking arm and US interests.
By Alan Oscroft. I see so many British stocks that look good value, I’m spoiled for choice. But at the moment, I really can’t see past Barclays (LSE: BARC).
The US banking failures have rattled the UK bank sector. And Barclays, with its US arm, has suffered the most. Even as I write, I see European economists talking of a real chance of global banking instability this year.
And I really do think there’s a significant chance of that happening. Oh, and inflation is worse than expected, which will also pressure the world’s financial institutions. So why do I see Barclays as a buy for April?
Well, it’s all about valuation, and I think the latest sell-off has simply pushed the Barclays share price down too low. Forecasts put the stock on a price-to-earnings (P/E) of under five. And unless Barclays goes bust, I think that looks like a steal.
Alan Oscroft does not own Barclays shares.
Barclays
What it does: Barclays serves 48m customers worldwide and has operations in a variety of sectors that include retail and investment banking. By John Choong: The recent sell-off in bank stocks have caused a lot of fear. Consequently, the Barclays (LSE:BARC) share price has fallen 20% since the start of the turmoil, as I write.
Nonetheless, there are plenty of reasons for me to believe that the stock is trading at remarkable value. For one, its financials remain one of the strongest among its FTSE 100 peers. This is in part due to the stricter regulations imposed by the regulatory bodies in the UK.
As such, its CET1, liquidity coverage and countercyclical (CCLC) ratios are extremely robust.
| Metrics | Barclays |
| CET1 ratio | 13.9% |
| Liquidity coverage ratio | 165% |
| CCLB ratio | 0.2% |
Data source: Barclays
Aside from that, it also holds one of the strongest deposit bases in the sector. This is because the percentage of risk-weighted assets it holds to total assets are much lower than its counterparts. Additionally, the bulk of its deposits are from retail customers, which means the likelihood of those funds being insured are higher — lowering the likelihood of a bank run.
Pair the above with valuation multiples that are at an industry low, and it’s easy to see why Barclays shares are my value play for April.
| Metrics | Barclays | Industry Average |
| P/B value | 0.3 | 0.7 |
| P/E ratio | 4.2 | 9.0 |
| FP/E ratio | 4.4 | 5.5 |
Data source: Google Finance
John Choong has no position in any of the shares mentioned.
Greencoat UK Wind
What it does: Greencoat UK Wind operates 45 onshore and offshore wind farms with a total power capacity of 1.6GW. By Royston Wild. April could be a big month for safe-haven UK shares if worries over the banking sector explode.
Renewable energy stock Greencoat UK Wind (LSE:UKW) is one such stock that could experience solid share-price gains. As the name implies, this company invests in wind farms across Britain. So, barring any production problems, it can expect to continue growing earnings regardless of the economic landscape.
Electricity is an essential commodity, after all. Greencoat UK Wind has attractive investment potential beyond the immediate term, too. Due to the government’s carbon-cutting legislation demand for clean energy is on course to soar.
Today this FTSE 250 firm trades on a forward price-to-earnings (P/E) ratio of just 6.5 times. It also carries a tasty 5.5% dividend yield. This all-round value makes it a great buy for investors seeking bargain stocks in my opinion.
Royston Wild does not own shares in Greencoat UK Wind.
GSK
What it does: GSK is a global healthcare company that operates in the areas of medicines and vaccines. By Edward Sheldon, CFA. GSK (LSE: GSK) shares have fallen over the last year and I think they offer decent value at present. Currently, the shares trade on a forward-looking price-to-earnings (P/E) ratio of less than 10 – well below the UK market average.
GSK’s recent full-year 2022 results showed that the company is performing pretty well right now. For the year, sales were up 13% at constant currency to GBP29.3bn. Meanwhile, adjusted earnings per share were up 15% to 139.7p.
Looking ahead, the healthcare company said that it expects revenue growth of 6-8% this year along with earnings growth of 12-15%. It expects to pay a dividend of 56.5p per share, which equates to a yield of around 4% currently. One key risk here is Zantac litigation.
This adds some uncertainty. Another is debt on the balance sheet. I think these risks are probably priced into the stock already though.
Edward Sheldon has no position in GSK.
Legal & General
What it does: Legal & General is one of the UK’s largest financial services and insurance companies. By Charlie Keough. My top British value stock for April is Legal & General (LSE: LGEN).
As I write, the FTSE 100 giant trades at a price-to-earnings ratio of just six. With this, I think its shares present great value. What also draws me to Legal & General is the plans it has to increase dividends via an initiative it has been working on in recent years.
By 2024, the business aims for a cumulative dividend ambition of GBP5.6bn-GBP5.9bn. And since announcing this in 2020, Legal & General has made great strides. On top of this, the stock offers a meaty dividend yield of around 12%, significantly trumping the Footsie average of around 3-4%.
Its share price has suffered in the last year. And this may be due to consumers shying away from making investments as they keep some much-needed cash to hand. However, with its low valuation and high dividend, I like the look of Legal & General shares.
Charlie Keough owns shares of Legal & General.
Persimmon
What it does: Persimmon is a housebuilder that buys land and develops housing estates across the UK By Christopher Ruane. I had been eying homebuilder Persimmon (LSE: PSN) for a long time before recently buying its shares for my portfolio.
Why now? After all, the property market might get worse in coming months and years. That could hurt both revenues and profits at Persimmon.
But I think that risk is already reflected in the share price. The current price-to-earnings ratio of 7 looks like good value to me, although of course if earnings fall sharply the ratio will be less attractive. Persimmon has set out plans to reduce its dividend this year.
Its revised payout policy could mean that coming years see smaller dividends than has been the case. I see that as prudent management given the uncertain housing market. Even after the cut, I expect Persimmon to offer an attractive dividend yield.
Persimmon has a business model that can generate strong profit margins in good years. As a long-term investor, I am prepared to wait. Christopher Ruane owns shares in Persimmon.
Persimmon
What it does: FTSE 100 member Persimmon is one of the UK’s largest housebuilders
By Paul Summers: My decision to take a position in housebuilder Persimmon (LSE: PSN) a couple of months ago hasn’t exactly got off to a flying start. The ongoing jitters surrounding the cost of living and rising interest rates coupled with the recent banking crisis were never likely to improve sentiment. Still, I’m not about the throw the towel (or should that be trowel?) in.
This still looks like a great value stock to me. As I type, Persimmon shares trade on a little less than 11 times forecast earnings. But this is after analysts have factored in a severe hit to numbers in this year.
We also now have clarity as far as the dividend is concerned. While a cut is never nice to see, a likely yield of 6.4% for FY23 remains more than satisfactory in my opinion. If/when interest rates reverse, the reaction in Persimmon’s share price could be explosive.
Paul Summers owns shares in Persimmon
Target Healthcare
What it does: Target Healthcare is a UK-based real estate investment trust (REIT) that invests in modern, purpose-built care homes. By Mark Tovey. Target Healthcare (LSE:THRL), like most REITs, has seen its share price collapse in recent months as interest-rate rises continue weighing on the value of its property portfolio. It is now trading at a price-to-book ratio of 0.64, with a forward dividend yield of 9%.
I like Target’s business model because it is positioned to benefit from unstoppable demographic trends. The number of over-85s in the UK is expected to nearly double to 3.3m over the next 25 years. Ready to accommodate that grey tidal wave is Target, with 101 care homes across the UK.
Importantly, Target has a diversified tenant base, with 34 different companies renting out its properties. Target’s average lease period spans close to three decades, and annual rental growth is baked into the contracts. The biggest risk of buying shares, which I plan to do, is that no one knows how far property prices could fall.
Mark Tovey does not own shares in Target Healthcare.
Unilever
What it does: Unilever is a British consumer goods conglomerate whose products include Dove, Magnum and Hellmann’s. By John Fieldsend. Unilever (LSE: ULVR) has a fantastic track record of strong dividend payouts combined with share price growth. A lucrative history for shareholders indicates good management and culture, and is the first thing I look for in a stock that I want to hold for many years.
Not only that, but the company is well positioned to weather the storm of a recession or cost-of-living crisis thanks to its brand power. When people shop, they tend to go for the cheapest option, especially in a recession. But when someone wants a brand item like a Magnum ice cream, there are no other options.
This is one reason why rising costs can be passed on to consumers with little difference in sales. And it’s key to why I think Unilever and its focus on strong brand power is an attractive value stock for the long term. John Fieldsend does not own shares in Unilever.
XP Power
What it does: XP Power is a world-leading supplier of critical power solutions for the industrials, medical, and semi-conductor manufacturing sectors.
By Zaven Boyrazian.
2022 was a rough year for the once-loved electronics specialist XP Power (LSE:XPP). The firm designs and manufactures electronic components used throughout medical, industrial, and semi-conductor manufacturing machines. But its share price took quite the blow following a legal spat with a rival firm.
XP Power was ordered to pay £40m in damages. And when combined with its own legal expenses, operating profits fell from a gain of GBP29.7m to a loss of GBP24.1m in 2022. What’s more, with a higher inventory spend to satisfy its order backlog paired with a recent acquisition, the net debt balance ballooned from GBP24.6m to GBP151m over the same period.
While frustrating, neither of these factors haven’t compromised the firm’s long-term strategy. Revenue is still growing by double-digits. And management expects to return to full profitability next year, with the net debt balance falling rapidly as its order backlog is cleared.
Trading at a forward P/E ratio of just 13, XP Power looks like a value opportunity to me.
Zaven Boyrazian owns shares in XP Power.
