Value stocks are investable shares that carry a price deemed lower than its intrinsic value. To put it in simple terms, if a stock is priced at £2 per share but its ‘true’ value is £3 per share, then this is a value stock.
Crucially, the stock might be undervalued because of wider sector disruptions (like the coronavirus), a recent news story that was negative, and simply because it is yet to reach its full potential.
In this guide, we discuss the best value stocks UK in the market right now and which brokers you might want to consider to complete your investment.
Top 10 Value Stocks 2021
If you’re looking for the best value stocks UK of 2021 – below you will find a list of which shares we like the look of. You can read a full review of each value stock by scrolling down!
- Cineworld – Best Value Stock to Buy UK 2021 – Invest now
- Entain – Online Gaming Value Stock That Continues to Reward Shareholders – Invest now
- Paypoint – Capitalize on UK Retail Locations Reopening – Invest now
- Capita PLC – Best Value Stock on the FTSE 250
- Vodafone Group – Best Value Stock UK for Growth and Dividends
- Biffa PLC – Best Stock UK for Sustainable Value Investing
- EasyJet – Best Airline Value Stock UK
- Lloyds Banking Group – Cheap Value Stock for Long-Term Growth
- Marriot International – Good Value Stock for Backing a Return to International Travel
- Lockheed Martin – Best Value Stock for Dividends
Best Value Stocks UK Reviewed
The best value stocks UK are not always easy to find. After all, if it is blatantly obvious that the stock is undervalued, everyone would be buying it. As such, it’s important to remember that the process of assessing whether or not a company is a value stock is somewhat subjective.
Nevertheless, we have done the hard work for you by exploring some of the best value stocks UK to consider right now.
1. Cineworld – Best Value Stock to Buy UK 2021
Cineworld is the UK’s largest cinema chain. Naturally, its domestic cinemas have been closed for some time now – as per extended lockdown restrictions. In turn, Cineworld stocks have taken a major beating since the pandemic began. To illustrate this point, Cineworld shares were worth 189p before the pandemic.
In March 2020, Cineworld shares hit lows of 15p – a drop of more than 90%. There has, however, been a promising recovery over the past few months. At the time of writing, you’ll pay just over 90p per stock. With this in mind, there are two reasons why Cineworld is one of the best value stocks UK to consider right now.
Firstly, with more than 1/3 of adults in the UK having received their first vaccine dose, things are moving at a rapid pace. Boris Johnson has set a series of ambitious – but highly achieved, roadmap targets over the coming months. This includes the reopening of cinemas across the country. This cannot come soon enough for Cineworld and its every depleting cash balance.
Secondly, the upside potential on this value stock is very attractive indeed. Even if we were to focus on a medium-term target of 189p – which is where Cineworld stocks were pre-pandemic, this would give us an upside requirement of 110%. Perhaps the biggest question with this stock is not only when cinemas will reopen – but what ticket numbers will be like once they do.
Your capital is at risk.
2. Entain – Online Gaming Value Stock That Continues to Reward Shareholders
Formally known as GCV Holdings, Entain PLC is behind a suite of online gambling websites. This covers a broad spectrum of sectors – including sports betting, the best casinos stocks, poker sites, and online bingo rooms. Some of the most recognized gaming brands under the Entain umbrella include Sportingbet, Ladbrokes, Coral, PartyPoker, and Bwin.
Although you might not have heard of this UK value stock – it is actually a constituent of the FTSE 100. This is impressive when you consider that the firm only went public in 2004. In terms of why Entain is one of the best value stocks UK to consider, there are several reasons to elaborate on.
Firstly, unlike the vast bulk of the FTSE 100, Entain has performed exceptionally well since the pandemic came to fruition. For example, back in March 2020 – where the stocks took a temporary dip, Entain shares were priced at just 292p each. Fast forward to late February 2021 and the same stocks are worth 1,411p.
In real terms, that’s an 11-month increase of over 380%. With that said, this promising upsurge is not over yet for Entain. On the contrary, there’s much to be excited about moving forward. At the forefront of this is further acquisitions planned for the coming year. Potentially, this could include Tabcorp – which has the lion’s share of the sports betting market in Australia.
Your capital is at risk.
3. Paypoint – Capitalize on UK Retail Locations Reopening
Paypoint provides payment service terminals for thousands of retail locations across the UK. The technology is largely used for consumers to top up their electricity and gas meters via cash payment. You will see Paypoint terminals in convenience stores, supermarkets, petrol stations, and other consumer-facing locations.
Like other stocks involved in the high street retail scene, Paypoint revenues have taken a major hit over the past 12 months. After all, many of its locations still remain shut for business. But, before the pandemic, this was one of the hottest up-and-coming stocks on the London Stock Exchange.
In fact, with an early 2021 stock market capitalisation of just over £400 million, this value share has plenty of upside potential. Crucially, operating margins sat just below 50% last year – which is even more impressive when you factor in net debt levels of just £12 million. We should also note that Paypoint doesn’t just offer terminals for gas and electricity payments.
It also has a network of over just 3,600 ATMs, as well as the technology for contactless debit/credit card transactions. In terms of its recent share price action, Paypoint shares were worth more than 965p in early 2020. At current prices of 580p – this low price stock presents a potential upside target of well over 60%.
Your capital is at risk.
4. Capita PLC – Best Value Stock on the FTSE 250
Some investors will focus on the FTSE 250 in their search for the best value stocks UK. After all, this is where you will find smaller companies that are not quite large enough to hit the primary FTSE 100 Index. In our view, Capita PLC is one of the best FTSE 250 stocks if you’re seeking market value.
For those unaware, the firm is involved in professional consultancy and business services. Founded in 1984, Capita stocks have suffered greatly since the pandemic, albeit, many would argue that the sheer size of the downfall is somewhat unwarranted. The shares were actually priced at just under 150p in February 2020 – dropping down to 19p just a month later.
The stocks have recovered slightly to 41p – but this is still a far cry from its pre-pandemic price. In fact, this would require a further upsurge of over 260%. As such, this value stock offers plenty of upside to target. This could be spearheaded by the government contracts it has recently secured – including proving training to the Armed Forces.
Your capital is at risk.
5. Vodafone Group – Best Value Stock UK for Growth and Dividends
If you’re looking for dividend stocks that offer also offer good long-term growth – Vodafone is well worth considering. First and foremost, the FTSE 100 constituent offers one of the best dividend yields in the UK market. Based on current pricing, this stands at a trailing yield of about 6%.
Although this is potentially enough to attract dividend seekers, Vodafone shares look undervalued when you consider its potential foothold on 5g services. At present, its reach covers the UK and several European countries. But, when you factor in Vodafone’s global reach, further rollouts could be on the cards.
Plus, when a risk-management perspective, it is also notable how Vodafone stocks have responded to the wider pandemic. For example, the shares were priced at 123p in February 2020. 12 months later, the same stocks are worth 130p. This means that Vodafone shares have grown 5.6% over the past year – while many of its competitors have made a loss.
Your capital is at risk.
6. Biffa PLC – Best Value Stock UK for Sustainable Investing
The world is slowly but surely becoming a greener and more sustainable place. In turn, there are many ways you can invest in so-called sustainable companies – many of which have taken a major stock price beating since the pandemic began. At the forefront of this is Biffa – a UK-based waste management company.
In particular, Biffa has invested heavily in recent years in creating a green framework for its waste collection services, which includes a plastic recycling plant based in County Durham. The firm has also secured a partnership with Nestlé Waters UK. This will see Biffa provide the conglomerate with recycled bottles.
Taking all of this into account, at a current market capitalisation of just £744 million – Biffa is arguably undervalued. There is plenty of upside potential in the short-to-medium term, too. Its 52-week stock price high stands at 313p, so at a current price of 244p – that’s an upside target of 28%.
Your capital is at risk.
7. EasyJet – Best Airline Value Stock UK
As per Boris Johnson’s recent lockdown roadmap targets – the very earliest that Brits will be able to travel abroad on holiday is May 17th. Although there is no guarantee that this target will come to fruition, Johnson’s announcement resulted in Easyjet seeing a 300% surge in flight bookings from the UK.
Packaged holiday bookings through the Easyjet website were 600% higher than the week prior. The key point is here is that while airline stocks were, and still are, one of the worst-hit sectors of the pandemic era, international travel will eventually return to pre-virus levels. It’s just a case of when.
Now, at current prices, Easyjet shares look like the best value stock to consider from the airline scene. In fact, in the five days prior to writing this article, the stocks have already surged 13%. But, before the pandemic hit, Easyjet stocks were worth much more – hitting highs of over 1,500p in February 2020. This means that to get back to this price point, a juicy upside of 60% is needed.
Your capital is at risk.
8. Lloyds Banking Group – Cheap Value Stock for Long-Term Growth
Make no mistake about it – UK banking stocks are worth just a fraction of their prior glory. There is no clearer example of this than Lloyds Banking Group – a stock that was worth more than 520p in 1998. And today? The very same stocks are worth just 39p – a decline of over 92%.
While it’s safe to say that Lloyds – like the vast bulk of the UK banking industry, will never see a stock price of this magnitude again. But, when you consider that you can buy a single Lloyds stock for just under 40p – this is one of the cheapest UK value stocks in the market right now.
In other words, a small investment of just £400 would get you over 1,000 shares. In terms of where the stocks are headed, it’s likely that Lloyds will begin reshaping its business model in the coming years to be more aligned with the digital transformation that we are seeing elsewhere in the banking industry.
Looking at its current market valuation of just under £28 billion, there is plenty of room here for long-term growth. Although this is likely to be steady, we can initially look at a pre-pandemic target of 59p – which it hit in February 2020. For Lloyds Banking Group shares to get back to this level – an upside of 51% is needed.
Your capital is at risk.
9. Marriot International – Good Value Stock for Backing a Return to International Travel
When you consider that most airline stocks are still down by double-digit percentages since the pandemic started, you would expect hotel chains to have suffered just as badly. However, this couldn’t be further from the truth in the case of Marriot International. The NASDAQ-listed stock is now the largest hotel group globally.
Some of its most recognized hotel brands include the Sheraton, Westin, Ritz-Calton, Luxury Collection, and JW Marriot. In the 12 months prior to writing this article, Marriot hit 2020 highs of just below $135 per stock. Naturally, with more and more governments around the world placing restrictions on tourists, Marriot stocks dropped down to just $46.
But, the recovery has since been very notable – with the stocks now worth $149 each. This means that over the course of the past year, Marriot shares are up over 10%. Not bad for an industry that is still struggling greatly. What is even more impressive is that Marriot did not let the pandemic phase its expansion plans.
The group is in the process of opening dozens of new hotels this year – especially in the Asian markets. In terms of where the stocks could go, Marriot shares have an all-time high of $152 – which was hit in late 2019. This means that the stocks need to rise by just $3 to enter new all-time high territory.
Your capital is at risk.
10. Lockheed Martin – Best Value Stock for Dividends
Lockheed Martin is a US-based company that sells security, arms, and defense technologies. When you consider that the firm’s biggest client is the US government, this strong and steady stock is one to hold during times of economic uncertainty.
With that said, based on current prices – as well as an attractive dividend, Lockheed Martin looks like a great value stock with plenty of upside potential. In terms of its dividends, this top-rated stock has increased the size of its yearly payment for two decades straight. At the time of writing, you’ll be able to get a dividend yield in the region of 3.7%.
But, when we look at the firm’s current stock price of $340, things get even more interesting. This is because, before the pandemic, the same shares were priced at just over $424.
When you look at the firm’s predictable inflows and strong balance sheet – a return to the $424 level in the medium-term is far from unlikely. If and when this price is triggered, you’d be looking at an upside requirement of 24%.
Your capital is at risk.
Are UK Value Stocks a Good Investment?
If you buy a share that sits within the remit of a ‘value stock’ – then essentially, you are investing at a discount.
A simple way to look at it is this – you buy a stock at £1.50 per share, but based on your fundamental research, the intrinsic value of the said share is £2.50. If your analysis comes to fruition, this means that you are investing at a discount of 40%.
How do you Find the Best Value Stocks UK?
As we briefly covered earlier, whether or not an investment represents a ‘value stock’ is subjective. After all, you are attempting to assess whether the stock is trading a lower price than its true value. In other words, the true value of a stock to one person will likely differ from the next.
The good news is that there are several ways in which you can find the best value stocks UK – such as:
Trailing Dividend Yield
A good starting point in your search for the best UK value stocks is to look at the trailing dividend yield. This looks at the firm’s dividend payments over the past 12 months – and how this relates to the current stock price.
In performing a quick calculation, you will be left with a trailing dividend yield in percentage terms. Crucially, if the company you are looking at carries a trailing dividend yield of over 5% – this could illustrate that it is a good value stock to consider.
The price-to-earnings (P/E) ratio is a favorite of value investors. In a nutshell, it looks at whether the stock is potentially undervalued by looking at its current stock price, against that of its earnings per share (EPS). By dividing the former into the latter, you will be left with a P/E ratio.
- Let’s say that an airline company has a current stock price of $40 per share and its EPS is $4 – that’s a P/E ratio of 10.
- Once we know what the P/E is, we then need to compare it to the sector average that the stock operates in.
- For example, we’ll say that the average P/E ratio of airline stocks is 17
- As our ratio of 10 is less than the average of 17 – this could mean that this represents a value stock
- If, however, the P/E ratio was higher than the sector average, the stock is likely to be overvalued
There is no need to perform a P/E calculation yourself anymore, as this information is readily available from various financial news platforms.
Free Cash Flow
According to Warren Buffett, chairman of Berkshire Hathaway, exploring a firm’s free cash flow levels is crucial in finding the best value stocks. For those unaware, free cash flow simply refers to the amount of cash a company generates from its core operations, less operating expenses.
The figure that you are left with is essentially the amount of cash the company has to meet its business objectives – such as servicing debt and facilitating growth.
Crucially, if free cash flow levels are on the rise, this could mean that you are looking at a value stock. After all, when a company is able to generate surplus cash inflows, this allows it to grow the business much faster.
This might be through acquisitions and bringing new products to the market. Additionally, an increase in free cash flows also allows the stock to increase the size of its dividend, which again, is something that value investors look for.
Best Value Stock Brokers in the UK
Once you have identified the best value stocks UK for your long-term portfolio – it’s then time to find a good broker. The best stock brokers in the UK are regulated by the FCA, offer thousands of shares, and allow you to invest in a cost-effective way.
To save you countless hours of research, below we review a couple of top-rated brokers that give you access to the best value shares UK.
1. eToro – Buy Value Stocks UK with 0% Commission
Our top-rated broker in the UK is eToro. All of the best UK value stocks discussed on this page can be found on this platform – with the provider offering over 2,400 shares across 17 UK and international markets. Best of all, you will be able to buy your chosen value stock without paying any commission.
This means that there is no longer a requirement to overpay for your stock investments – with the likes of Hargreaves Lansdown charging £11.95 per trade. The commission-free offering on eToro is not only applicable to UK stocks but all 16 international markets, too.
If that wasn’t enough, eToro will even waiver the 0.5% stamp duty tax that you need to pay when buying listed on the London Stock Exchange. You might also be pleased to know that eToro supports fractional shares. This means that you can buy any amount of your choosing, as long as you meet a $50 minimum (about £40).
This is particular useful if you are looking to invest in the best value stocks listed in the US. This is because American shares often cost several hundred dollars each. If you want to invest in value stocks via a diversification strategy, eToro also offers in excess of 250 ETFs. Once again, these are all commission-free. Another popular feature found on this user-friendly platform is the Copy Trading tool.
This allows you to copy an eToro trader like-for-like – paving the way for a passive investment journey. You can open an account at eToro in minutes and instantly deposit funds with your debit/credit card. Bank wires and e-wallets are also supported. Finally, your investments are safe at eToro, with the broker holding a license with the FCA, ASIC, and CySEC.
- Super user-friendly online trading platform
- Buy stocks without paying any commission or share dealing charges
- Trade CFDs in the form of stocks, indices, commodities, forex, and more
- 2,400+ stocks listed on the UK and international markets
- 250+ ETFs
- Deposit funds with a debit/credit card, e-wallet, or UK bank account
- Ability to copy the trades of other users
- FCA and FSCS protections
- Not suitable for advanced traders that like to perform technical analysis
83% of retail investors lose money trading CFDs at this site.
2. Capital.com – Trade Value Stock CFDs With Zero Commission
The vast majority of you will be looking to buy shares in your chosen value stock in the long-run. If so, eToro is by far the best option. But, if you are looking to take a more adventurous approach to value stock trading – you might want to consider Capital.com.
This is because a CFD broker – Capital.com allows you to trade thousands of stock CFDs with leverage. As a UK investor, you can trade value stocks with leverage of up to 1:5. This means that with a £200 account balance, you can enter a position worth £1,000.
In addition to this, Capital.com also supports short-selling on its stock CFDs. This could come in handy should you come across a stock that you believe is overvalued. Irrespective of which stock you trade and whether or you long or short – Capital.com is a 100% commission-free CFD broker.
This means that the only fee you need to factor into your trading margins is that of the spread. In many cases, the spread on this popular platform is very competitive – especially when trading stock CFDs listed in the UK and US. Capital.com is also a good choice if you are a complete newbie in the world of online trading.
This is because the minimum deposit is just £20 and the platform comes packed with a wide variety of educational tools. There is even a demo account facility – where you can trade value stocks in a completely risk-free environment. Much like eToro, Capital.com allows you to get started with an account in minutes. Deposits methods include debit/credit cards and e-wallets.
- Trading on hundreds of US and UK shares
- Educational app for new traders
- AI assistant identifies your weak points
- Trade ideas generated daily
- Excellent charting and analysis interface
- 100% commission free trading
- Cannot build custom trading strategies
72.6% of retail investor accounts lose money when trading CFDs with this provider.
How to Buy Value Stocks in the UK
If you’ve read through our guide on the best value stocks UK up to this point – you should be ready to take the plunge. All that is left to do is open a brokerage account and buy your chosen value stock!
If this is your first time investing online – we are going to walk you through the process with commission-free broker eToro.
Step 1: Open an Account and Upload ID
To open an account at eToro, visit the provider’s homepage and look out for the ‘Join Now; button. Upon clicking it, a pop-up box will appear asking you to enter some basic information.
This is a straightforward process and will simply need to collect the following from you:
- Personal Information (name, address, date of birth, etc.)
- Email address
- Mobile Number
- National Insurance Number
Step 2: Confirm Identity
All FCA-regulated brokers are required to verify the identity of new clients, and eToro is no exception. Perhaps the stand-out feature here is that eToro is usually able to verify your documents in less than a couple of minutes.
All you need to do is upload a clear copy of your passport or driver’s license. For proof of address, you’ll need a recently issued bank account statement or utility bill.
Don’t have these documents to hand? You can still deposit up to $2,250 (about £1,600). But, you will need to provide the documents before a withdrawal request can be made.
Step 3: Add Funds to Your Trading Account
You now need to make a deposit – should you wish to buy your chosen value stocks straight away. You can do this through a UK debit or credit card. E-wallets like Paypal and Skrill are also supported, as are UK bank transfers.
Step 4: Search for a Value Stock
There are two ways in which you can find the best value stocks UK on eToro. If you already know which value stock you wish to buy, search for it. When you see the stock load up, click on the ‘Trade’ button.
Alternatively, you can click on the ‘Trade Markets’ button, followed by ‘Stocks. This will allow you to browse the eToro stock library – and you can filter down by the relevant exchange or sector.
Step 5: Place an Order
All you need to do now is complete your value stock investment. In the ‘amount’ box, enter the amount that you wish to invest – ensuring that you meet a $50 minimum.
All investments on eToro are priced in dollars – even if you are buying UK-listed value stocks.
Finally, to complete your commission-free value stock investment – click on the ‘Open Trade’ button!
The best value stocks UK allow you buy shares that are potentially at a lower price than its intrinsic value. This means that you can enter the market at a favorable discount.
In order to find the best value stocks UK, you need to perform some research of your own. This includes metrics such as the P/E ratio, trailing dividend yield, and free cash flow levels.
And of course, you need to find a suitable broker to buy your chosen value stocks from. FCA-regulated broker eToro offers all of the best value stocks UK discussed on this page on a commission-free basis.
You can get start with a value investment strategy at eToro in less than 10 minutes by clicking the link below!
eToro – Best Broker to Buy Valuen Stocks UK with 0% Commission
67% of retail investor accounts lose money when trading CFDs with this provider.
What is considered a value stock?
The general consensus in the investment arena is that value stocks carry a share price that is lower than its perceived, intrinsic value. In simple terms, the stock in question is undervalued.
What is a value stock vs growth stock?
Growth stocks are companies that are yet to realize their true potential - meaning that they are in the phase where their stock price is growing at above-average rates. Value stocks, on the other hand, refer to shares that are trading at a price below its book value.
Are value stocks a good investment?
Yes, value stocks are considered a good investment as they allow you to purchase shares at a price lower than their true value..
What is the best broker to buy UK value stocks?
There are many UK brokers that offer the best value stocks to buy. But, for us, eToro stands out. This FCA broker allows you to invest in value stocks without needing to pay any trading commission or ongoing platform fees.
What are the best value stocks to buy right now?
Some of the best value stocks to buy that we have identified include Paypoint, Easyjet, Cineworld, and Entain. You are, however, advised to find your own value stocks to buy, based on your own research.