2 UK shares I like better than Rolls-Royce

As a value investor, I like to buy stocks when they are trading below their intrinsic business value. Right now, I think there are some big opportunities in UK stocks.

Rolls-Royce Holdings has led on FTSE 100 since the start of the year and the stock is up 66% over the last 12 months. But it wasn’t the engine manufacturer that caught my eye.

Ibstock

I am a brick factory Ibstock (LSE:IBST) could be a good long-term investment. The stock is up about 7% since the start of the year and I want to buy it before it goes even higher.

Unlike Rolls-Royce, the company has bought back shares and invested in increasing production capacity. I expect this to pay off over the next few years.

At current prices, Ibstock shares don’t look valuable to me. The stock trades at a price-to-earnings (P/E) ratio of 11 and pays a dividend yielding 5%.

Ibstock’s biggest risk is competition – there are few British brick companies. In contrast, the capital-intensive technical nature of aerospace engineering shielded Rolls-Royce from potential disruption.

I don’t see this as a significant cause for concern, though. About 30% of the bricks used in British buildings are imported, as demand outstrips supply.

Although some manufacturers have increased capacity, there is still a shortfall of 11%. As a result, I think the market is big enough to allow all participants to do well.

Ibstock has a solid balance sheet and a leading position in a market where demand looks set to outstrip supply for some time. I think this makes the stock an attractive investment proposition.

Barclays

Barclays (LSE:BARC) all look like good value right now. The stock is up 3% since the beginning of the year and I want to add it to my portfolio this month.

Unlike Rolls-Royce – and like other FTSE 100 banks – I think that Barclays is well positioned to cope with any macroeconomic environment. That’s part of the appeal for me as an investor.

The company combines its retail business with one of Europe’s largest investment banking operations. This gives you the opportunity to do well whether interest rates are high or low.

In 2022, Barclays benefited from an increase in interest rates in its retail operations. The bank’s net interest income (interest received on loans minus interest paid on deposits) increased by 13%.

When rates are lower during the pandemic, investment banking operations come first. I think this means that Barclays can offer some relative stability during any economic climate.

The risk with business comes from regulation. UK regulations are stricter than elsewhere in Europe and there is a risk that this could limit the company’s profitability in the future.

As I see it, this risk is more than offset by the current share price. The stock trades at a P/E multiple of around 6 and has a dividend yield of 4%.

Compared to Rolls-Royce, I think Barclays offers a more stable investment proposition. That’s why I prefer the current price.