It’s been a bad month for the FTSE 100. The British index is down nearly 5% over the past 30 days after a series of economic shocks caused a global market sell-off.
However, I’ve long seen the FTSE 100 as a good place to look for value stocks. The Footsie, and many of the stocks on it, have been unpopular since the Brexit vote engendered a period of economic uncertainty.
But right now, I think concerns around UK stocks are overdone.
Economic forecasts aside, ‘only’ about a quarter of FTSE 100 sales are linked to the UK economy. It’s clear that the index and economy are de-linked to some extent.
So, here are three no-brainer value stocks I’ve bought or am looking to buy more of before July.
Hargreaves Lansdown
Hargreaves Lansdown (LSE:HL) is down 51% over the past year. The firm performed extraordinarily well during the pandemic, but the growth hasn’t been sustained.
Amid numerous lockdowns, Britons flooded onto Hargreaves Lansdown’s trading platform. But, with offices, restaurants and the wider economy fully open, the firm has seen a slowdown.
It has a price-to-earnings (P/E) ratio of 12.3 and compared to many FTSE 100 stocks, that could look a little pricey.
But I think Hargreaves Lansdown is operating in a high-growth area with suggestions that one in 10 Britons started investing since the start of the pandemic. I also see the market-leading investment platform becoming increasingly popular in the future.
However, there might be some short-term pain this year as individual investors reconsider their finances amid a cost of living crisis.
Persimmon
Persimmon (LSE:PSN) is perhaps best known for being a dividend big hitter. However, I think there are more reason to buy this stock, other than the current 12% dividend yield.
Firstly, it seems unlikely that this huge dividend will be sustainable. So, I’d be buying this stock for the long-term value.
Persimmon is one of the UK’s largest property developers, but it’s also less exposed to the cladding crisis than other companies.
The developer plans to spend £75m on recladding homes in the UK. This is less than 10% of 2021 pre-tax profits. By comparison, some of its peers will see a year’s worth of profit wiped out by the cladding pledge.
Despite the economic turmoil, other housebuilders have recently upgraded their profit guidance for the year. So while there may be some issues caused by higher interest rates and inflation, we’re not seeing it yet.
Lloyds
Lloyds (LSE:LLOY) is a sizeable mortgage lender. In fact, 71% of its loans are mortgages. So the bank is more exposed to the property market than its more diversified peers.
I see Lloyds as an unloved FTSE 100 stock. It trades with a P/E ratio of just 5.8, with few banks looking cheaper.
For Q1, it reported pre-tax profits of £1.6bn, beating the average forecast of £1.4bn. However, this was a fall from £1.9bn in the same quarter last year. This was largely due to £177m set aside to protect the bank from potential defaults.
Higher interest rates will increase margins, so the short-term outlook might be positive if mortgage volumes don’t decrease.
Equally, I like the move to become a property owner and enter the rental market.
A cocktail of economic issues might prove problematic for it over the next year or so, but in the long run, I’m positive on Lloyds.