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- Having gone through the volatile periods of 2020, the investors are getting inclined towards value stocks
- Most of these stocks have delivered double-digit returns since January.
- The investors are going back towards companies that have solid fundamentals.
Growth stocks were a popular choice among investors for a year like 2020. The pandemic led to a meltdown in global stock markets and caused a loss of wealth for investors. Having gone through the volatile periods of 2020 and simultaneously heading further into a post-vaccine world, the investors are getting inclined towards value stocks. Under the latest shift, the investors are going back towards companies that have solid fundamentals but at the same time, are undervalued.
The market is expected to go through volatile periods and investing in value stocks shall help investors in beating the market volatility. Trade experts suggest that building positions steadily in fundamentally sound companies shall lead to strong capital appreciation over the long term.
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With this in mind, we shall put our lens through some value stocks listed on the London stock market.
- Go-Ahead Group Plc
The Go-Ahead Group Plc (LON: GOG) is a public passenger transport company based in Newcastle, United Kingdom. The company has underpinned high hopes in the London and international bus division, and the overall financial outlook for the year 2021 has improved. Moreover, the regional bus segment is expected to make a positive contribution this year, given the improvement due to the ongoing vaccination programme. Notably, the company is expected to pay dividends this year.
The major chunk of revenue, around 90 per cent, comes through contracts, and hence there is no risk from volatility in passenger demand. The company is good at cash generation. The company has expressed its happiness to see passenger journeys reaching nearly 60 per cent of pre-crisis levels in some regions, according to its recent trading update. The company has good visibility of financial performance for the remaining part of the year. Shares of Go-Ahead Group have delivered a price return of 31 per cent since January. GOG shares traded at GBX 1,304 on 9 March 2021 at GMT 8:22 AM+1.
- FirstGroup Plc
FirstGroup Plc (LON: FGP) is a transport provider with a strong presence across the UK and North America. The company delivered a resilient performance in H1 FY21, with positive EBITDA. In H1 FY21, the company witnessed strong revenue generation from North American contract customers. The company has taken efficient action to reinforce the balance sheet, with robust adjusted cash flow during the period and current liquidity of £805 million. Shares of FirstGroup have delivered a price return of 23 per cent since January. FGP shares traded at GBX 91.25 on 9 March 2021 at GMT 8:41 AM+1.
- Ibstock Plc
Ibstock Plc (LON: IBST) is a Leicestershire -headquartered leading manufacturer of clay and concrete building products in the country. For the near term, Ibstock is encouraged by the improved market trends and demand resilience across the industry from merchant customers and housebuilders.
The group remained mindful of Covid-19 uncertainties. However, it is well supported by the Help-to-Buy scheme and new Stamp Duty rules. Further, an all-time low interest rates regime, along with higher LTV mortgages availability, the company is expected to record robust growth this year.
The company managed to reduce its debt by nearly £15 million during the fiscal year 2020 that helped in improving the liquidity position. The company did well in terms of concrete sales volumes and solid clay brick sales volumes that remained ahead of the previous year. Shares of Ibstock have delivered a price return of 17.4 per cent since January. IBST shares traded at GBX 242.40 on 9 March 2021 at GMT 9:28 AM+1.
- Idox Plc
Idox Plc (LON: IDOX) is a FTSE AIM All-Share listed software developer, which provides solutions for the government and other industries such as healthcare, transport, engineering, and property. Idox won a contract from the Scottish Government and Scottish Local Authorities to provide an election e-Counting solution in December 2020.
The FY20 results reflected the quality of earnings of the Idox business along with improvement in financial performance. During FY20, revenue increased by 4 per cent year-on-year, while the recurring revenue surged 5 per cent. Also, the order book and adjusted EBITDA rose by 31 per cent and 36 per cent year-on-year, respectively.
In parallel, the company managed to reduce its net debt substantially by 39 per cent to £16.1 million as of 31 October 2020. Also, the company managed to declare a final dividend per share of 0.3 pence that was in line with stated intentions. Shares of Idox have delivered a price return of 43.43 per cent since January. Idox shares traded at GBX 72 on 9 March 2021 at GMT 9:46 AM+1.
- Vistry Group Plc
UK-based Vistry Group Plc (LON: VTY) is engaged in the business of designing, building and selling of houses. The company made a strong start to the year, with an increase in the underlying sales rate and the private sales per active site per week in the first eight weeks of 2021.
Assuming stable market conditions, the company expects 2021 adjusted profit before tax to be at least £310 million, with 2020 EPS higher than EPS 2019. Moreover, in 2021, it also expects an improvement in net cash position and an average month-end net debt to be less than £200 million. VTY will continue to make an investment in the land bank as per strategy to increase partnerships and housebuilding.
During the H2 2020, the company witnessed an increase of 15 per cent year-on-year in private sales rate per outlet along with further improvement in quality and customer satisfaction. Also, the company had finally resumed its dividend payouts and has proposed a final dividend of 20 pence per share. Shares of Vistry Group have delivered a price return of 8.78 per cent since January. VTY shares traded at GBX 1,022 on 9 March 2021 at GMT 10:14 AM+1.