- ITV, Barratt Developments, Johnson Matthey all have lots of growth prospects.
- They have all dropped in value in the last 6-months.
- All of these stocks are in growth industries.
There is never a wrong time to buy stocks. Trying to outsmart the market by trying to find perfect entry points often leads to losses or missed opportunities. That said, there are opportunities that one cannot pass up on when they arise. Such stocks usually have the potential of giving high returns in a very short time.
These three UK shares are so undervalued right now that it’s pretty much a no-brainer to invest in them. They are ITV (ITV), Barratt Developments (BDEV), and Johnson Matthey (JMAT).
ITV (ITV) may be down by 15% in the last 6-months, but going by its fundamentals, this correction presents a good opportunity to buy this stock.
That’s because the company is in the digital transformation process, and as per its H1 financials, the move is paying off.
While announcing H1 results back in July, the CEO, Carolyn McCall, stated that revenues shot up by 27% to hit £1.5 billion. She noted that the results were driven by a 26% increase in ITV studios revenues. It was also driven by an increase in ad revenues as the economy started to overcome the worst of the pandemic.
These are factors that are likely to play a role in this company’s value going into the future. For context, with vaccination levels now at their highest levels, the world economy is expected to return to full normalcy pretty soon since the pandemic started. This means ad spending is only set to go up going into the future. For ITV, this translates to revenue growth going into the future.
At the same time, the company generates a substantial amount of its revenues from its content production studios if its H1 results are anything to go by. This is a positive indicator given that this is one of ITV’s strongest points.
This is evident in the number of top-rated shows that the company has produced so far. Some of the top shows that the ITV studios have produced including Line of Duty and The Chase.
With an edge in the lucrative content production market, one can only expect that this company’s revenues and value will only grow over time.
The books are good too, and paint the picture of a company that is standing on solid ground. The current ratio is a good measure of corporate health, and on this front, ITV is doing pretty well. It has a current ratio of 1.37, which means it has more than enough resources to meet its current liabilities without any impact on its operations.
Its cash flows are quite good too and are net positive. This means the company has the resources to carry out its daily operations without interruptions that a lack of liquidity may occasion.
A combination of these factors makes this UK stock a no-brainer to buy now. With the economy set to get better post-pandemic, this stock could easily double or triple in value in a few years.
With the UK real estate market hitting price levels it has not seen since 2004, UK real estate developers are no brainer stocks to buy now.
The most interesting of them at this point is Barratt (BDEV). Having shed off at least 11% of its value in the last 6-months, the stock is in a buy zone at the moment.
That’s because the factors behind its stock price slide are short-term in nature. Like other UK companies, the stock has been hit by supply chain challenges. However, this problem will disappear as the economy normalizes, and fundamentally strong companies like Barratt will record value growth.
The company has already indicated that it intends to go ahead with all its plans, despite the logistical issues that have now hit the UK economy. It recently stated that its plans to build around 17k homes in the current financial year are still on track. It also stated that working closely with suppliers and subcontractors has avoided a lot of the issues that most of its competitors are going through.
Barratt’s books look pretty good too. The company has a current ratio of 4.27. This means it has more than enough resources to pay all its current liabilities. Considering that rates are expected to go up in the near term, this is a cushion that could play a role in this company’s value growth going into the future.
As the economy reopens and the post-pandemic supply bottlenecks disappear, this stock could give investors a pretty good return in the long run.
In the past 6-months, Johnson Matthey has shed off about 14% of its value. However, if its long-term prospects are anything to go by, this UK stock is a pretty no-brainer buy.
Johnson Matthew (JMAT) primarily focuses on helping internal combustion engine vehicles emit less carbon to the atmosphere. Given that the world is increasingly frowning upon environmentally harmful processes, the demand for the services of companies like Johnson Matthew is set to grow.
The company has also developed a new segment that is targeted at the medical devices market. Under this new segment, the company offers battery systems and fuel cell technologies. This is a high-growth market that could play a role in the long-term value appreciation of this stock.
Even more interesting is the fact that this company is getting into the highly lucrative electric vehicle battery market. Two months ago, the company announced that it was part of a consortium of 7 companies that would develop solid-state batteries for the fast-growing EV market.
With most vehicles on the road in the UK and other developed economies set to become electric by the 2030s, this is a huge growth opportunity for this company.
It’s a stock that can reward patient investors with incredible returns.
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