3 value shares to consider now

One of the main things about value stocks is that the underlying business tends to get into trouble, at least temporarily. And they rarely come with a rosy outlook – which is often why they look cheap.

But skilled investors can pick good stocks once they have been thrown away from the market. Indeed, the value can be re-rated higher. And especially if the situation in business starts to improve.

Sometimes stock price gains can be long-awaited. But it’s possible to pick cheap-looking stocks that are struggling to recover. Or, even worse, the stock can go down even though it looks like a bargain all the time.

Hospitality

I think some stocks are worth considering and researching more deeply now. For example, managing restaurant and pub operators Mitchells and Butlers looks cheap in several indicators.

With the share price close to 164p, the price-to-book value is about 0.45. And the price-to-sales ratio is about 0.43.

However, the company has a lot of debt. And it can be a problem if trading in the business goes down.

There is a history of volatile earnings showing the business is at the mercy of swings in the general economic cycle. But it could work both ways and drive the stock price higher if earnings gain traction next year.

Meanwhile, January’s first quarter trading update contained some strong figures. And I would describe the outlook statement as optimistic but cautious.

Building products

Ibstock manufacture of clay and concrete building products. And with the share price above 168p, the expected price-to-earnings ratio is less than 11 for 2024.

However, the main attraction is the dividend. City analysts expect yields of less than 5% for next year.

But the company’s financial and trading records show multi-year volatility in earnings and dividends. And that betrays the cyclicality in business, which increases the risk for investors.

On March 8, the company posted corresponding figures for 2022. But directors said activity in the early weeks of 2023 was weaker. And that was then “be more careful” expected in the fourth quarter of 2022.

Commodity

MP Evans (LSE: MPE) is a British company that owns, manages and develops sustainable palm oil plantations in Indonesia.

The main attraction for this stock is its expected dividend yield of just over 5% for 2024. And with the share price close to 860p, the number of anticipated earnings is just over nine for next year.

That figure is combined with a book value of around 1.2 to make the overall value look a bit out of whack.

Meanwhile, revenue and dividends have performed well over the years. But the business has a record of unstable earnings.

And the main risks include the vulnerability of crops to damaging natural events and fluctuating palm oil prices. However, the company has achieved a net cash position on the balance sheet rather than net debt. And the business has grown both organically and through acquisitions.

There are opportunities and threats for these three businesses. And positive investment results are not guaranteed. However, each one is worthy of deeper and more in-depth research for investors who want to look at long-term prospects.