The UK stock market is chronically undervalued, affording value hunters rich pickings as we approach the end of 2024.
etoro has picked out a selection of ‘bargain’ UK shares for Black Friday spanning various sectors, each with its own compelling thesis. The selection spans a variety of sectors and highlights a number of companies that could benefit from increased spending during the end-of-year period.
“Whether you’re looking for growth, stability, or value, there are plenty of UK stocks across key sectors that could offer intriguing opportunities this Black Friday. By strategically investing in companies with attractive valuations, investors can potentially capitalise on market shifts and seasonal trends,” said Sam North, market analyst at eToro.
Here are etoro’s picks explained in their own words:
JD Sports
Black Friday is an important annual event for JD Sports as the company capitalises on promotions to boost sales or clear older stock. With its P/E ratio and other valuation metrics near historical lows, the stock appears undervalued. For the share price to return to the highs seen in 2022, it would require a 50% increase, making it an intriguing opportunity for investors.
Burberry
While luxury brands often resist widespread sales to maintain exclusivity, the heightened interest during Black Friday could still benefit Burberry indirectly. The company’s P/E ratio is near historical lows, and its stock price recently rebounded from a 14-year low. If CEO Joshua Schulman can execute a strong strategy, there could be significant upside potential from here.
Dr. Martens
As the bootmaker’s stock price is down over 35% year-to-date, the company could be an undervalued opportunity for investors willing to take on some risk. A strategic recovery could position Dr. Martens well if it can bridge the gap between tradition and evolving consumer tastes.
Standard Chartered
While banks don’t participate directly in Black Friday, retail events like these can influence consumer spending and borrowing habits. Standard Chartered could benefit from increased holiday financing, which may drive up credit card usage and borrowing. Trading at a 9-year high, the bank’s P/E ratio is near historic lows, signalling that there could still be room for further gains, particularly with a solid outlook for the coming quarters.
Frasers Group
As the owner of major retail brands like Sports Direct, Frasers Group is poised to take advantage of Black Friday and offer discounts across its multi-brand portfolio to attract shoppers across a variety of demographics. Frasers’ P/E ratio is near historical lows at 9.09, its P/B ratio is near a three-year low, and its share price remains 25% below its all-time high. All of this demonstrates strong underlying performance and potential value for investors.
Berkeley Group Holdings
While not directly affected by Black Friday, companies like Berkeley Group can benefit from increased consumer confidence and spending. Investors looking for opportunities in the real estate sector may find value in Berkeley, as it is trading below peak levels. Although its stock price is in decline, it could present an opportunity for investors if shares approach a historically strong support point at 3,700p.
Greggs
Known for its popular bakery items, Greggs continues to attract customers during Black Friday with promotions like this year’s 25% off orders via Just Eat. While the company is not heavily reliant on Black Friday, such discounts can still boost both foot traffic and online sales. The stock offers a low-risk investment, with a strong dividend yield near a three-year high.
Diageo
As one of the world’s leading beverage alcohol companies, Diageo is a reliable choice for investors seeking stability and growth in the consumer goods sector. Trading at a P/B ratio of 6.49, close to a five-year low, and a P/E ratio of 16.98, near a 10-year low, Diageo could be undervalued. Its P/S ratio of 3.24 is also near a 10-year low, suggesting potential for long-term growth. The company’s strong dividend yield is near a 10-year high, making it an attractive option for investors looking for both growth and income.
Auto Trader
As one of the UK’s leading online automotive marketplaces, Auto Trader capitalises on increased consumer activity during the holiday season, even though it doesn’t directly participate in Black Friday. From a technical perspective, the 2021 high of 748p serves as an important level to watch. With solid fundamentals, Auto Trader represents a good option for investors looking for value stocks.