2 stocks ready to bounce back

When buying stocks for my portfolio, I pay special attention to companies that are losers and dislikes. Although with this strategy I can sometimes buy legitimate lemons, I also sometimes find bargains.

With that in mind, I believe the two stocks below have reached oversold territory. I would buy two of them if I had cash to spare, as I am the odds in favor of recovery.

Landa ah!

English land (LSE:LAND) is a diversified real estate investment trust (REIT) that holds a wide range of properties, including retail, office, residential and campus-style developments.

The share price has fallen 17% over the past 12 months. That’s partly because rising interest rates weigh on real estate values.

Furthermore, retail is a significant part of British Land’s portfolio, accounting for approximately 30% by value. The Organization for Economic Co-operation and Development reported in October 2022 that consumer confidence in the UK is lower than in developed countries. Penny-pinching purchases will impact retailers, having a knock-on impact on the rent that British Land can expect to charge.

Despite the dark clouds, I think the share price of British Land presents a good entry point for me. In its half-year report released on November 16, British Land’s net tangible asset value was 695p per share. With REIT shares trading at 409p a share, that’s a 41.1% discount to net asset value – a significant margin of safety.

In short, British Land’s correction seems overdone at this level. The REIT offers a high dividend yield of 5.7%, and a management team that targets value accretive acquisitions (creating development opportunities rather than just sitting on properties).

Home, sweet home

I will buy it persimmon (LSE:PSN) share price in US Dollar Despite falling 41% in the last 12 months, I believe this UK housebuilder is a long-term winner.

Yes, housing is a boom-and-bust business, and the sector is in the doldrums right now. Persimmon recently advised that its outlook for 2023 was uncertain as it was unable to provide a profit forecast for that year. It also reduced the dividend by 75%.

In addition, while previous industry slowdowns have seen government intervention, now there is no such support. However, the government has introduced a new 4% tax on house profits to address the insecure layer. And a new investigation by the UK’s Competition and Markets Authority (CMA) adds to the uncertainty.

But I believe all this bad news has been priced, and I see an opportunity to buy now and wait for the bright time to come.

Ultimately, England needs another home and Persimmon is well placed to deliver. As the country’s largest housebuilder, it has a strong balance sheet, with net cash of £850.7m at the end of 2022. I think if I can overcome the short-term challenges, I should be well rewarded in the long-term.

It’s darkest before dawn

Although volatility can make my brokerage account a stressful experience, I trust my friend as an investor. When the share price of high-quality companies halves within a year, it can sometimes signal an opportunity to buy assets below their true value. That’s why I’m always looking for depressed stocks that can bounce back!