Should I buy UK value shares this April?

The temptation to buy something that looks cheap can be hard to resist. Some stocks are priced like that – offering shares in a great company at a knock-down price.

But other things are clearly value traps. The price is marked down because other investors have discounted some future risks that I may not fully appreciate.

Still, many UK stocks look cheap to me right now. Some at least can be a bargain. So should I act now and start buying value stocks?

Risk and reward

To answer these questions, I use a normal investment approach. At the end of the day, value stocks are still stocks.

When investing, I look to buy into large companies at attractive prices. If the shares have been marked down too much in price, which can sometimes be because they are facing challenges.

For example, one of the value shares on the radar from time to time McBride. A strong position in the manufacturing of cleaning products for supermarkets can help to make big profits. The stock is up 44% this year, but is still 80% lower than it was five years ago. Do they bargain for my portfolio?

Although first-half profits rose 32% year-on-year, the company reported a pre-tax loss of £20m. Net debt of £170m dwarfs McBride’s £50m market capitalisation.

While I think McBride has potential as a business, the high risk of debt and the inflation that wreaks havoc on profitability made me buy the stock immediately. I think the price has a lot of potential room for price growth. But the risk was too great for my tolerance.

Quality on sale

But are all stock values ​​like that?

I don’t think so.

For example, Topps Tiles (LSE: TPT) is selling cash per share. But profit. A price-to-earnings ratio of just eight and a dividend yield of over 7% certainly sounds attractive to me. The company announced last week that its first half had a record profit of £130m. Topps’ balance sheet looks healthier than McBride’s. Topps ended its latest financial year with £16m in adjusted net cash.

The company has also been looking to the future, developing online-only businesses such as Pro Tiler Tools. That can help maintain an excellent rate of revenue growth.

I see the risk. For example, an uncertain housing market can lead to lower demand for building products, affecting sales and profits. Then again, that can cut both ways. If an existing home owner is staying put rather than selling in an uneven market, they may decide to remodel the bathroom and kitchen.

I love the business of Topps Tiles and would consider buying this value stock for my portfolio today, if I had the money to invest.

Hunt for value stocks

Concerns about the UK economy mean that many stock valuations look cheap today. This may not last forever, especially if investor confidence rises. Amidst these stocks, I think there are some genuine bargains for my portfolio.

So I’m spending my time now hunting for stocks to buy, while the walk is good.