Two value stocks I'd buy in May

Pound coins
Pound coins

Given that the FTSE 100 index is still relatively close to its all-time highs and showing no signs of retreating below 7,000 points, it's no surprise that investors are seeking out value right now. With that in mind, here's a look at two companies that I believe offer strong value at present.


Macfarlane Group

Packaging specialist Macfarlane Group(LSE: MACF) is a classic under-the-radar value stock in my opinion. Packaging may not be the sexiest investment theme in the world, but that doesn't mean there aren't sizeable returns on offer. Indeed, £87m market cap Macfarlane Group has delivered annualised total returns of a huge 32% over the last five years to its shareholders.

Revenue in the last five years has increased from £145m to £180m, and earnings in this time have grown from 3p to 4.6p, a compound annual growth rate (CAGR) of approximately 9%. City analysts expect earnings in FY2017 to continue moving higher, with consensus estimates of 6p per share suggesting earnings growth of a formidable 30% for the year.

However despite the fact that Macfarlane Group has strong momentum at present, the shares can be purchased very cheaply. Indeed, the stock trades on a forward looking P/E ratio of just 10.5 and an enterprise (EV) to sales ratio of around 0.58, low multiples for a company growing quickly. Throw in a dividend yield of approximately 3.1%, and Macfarlane Group appears to offer outstanding value.

The company recently stated that it will continue to focus on opportunities in sectors with "strong growth prospects" and as a result, I can't see shares in Macfarlane Group staying this cheap for much longer.

Empresaria Group

Next up is little-known staffing and recruitment specialist EmpresariaGroup(LSE: EMR). The £69m market cap company operates a multi-branded business model, offering permanent, temporary and offshore recruitment services across six sectors and 20 countries. Empresaria shareholders have enjoyed a huge 600% rise in the share price since the start of 2013, but the company still appears to offer value to my mind.

Revenue grew 44% to £270m last year after the company made several key acquisitions, and analysts are forecasting a further revenue increase of 26% for FY2017. Furthermore, earnings per share have powered upwards at an annualised rate of around 24% over the last five years and are forecast to increase 22% this year. The company also has a large pile of cash on its balance sheet, with £18m in the bank at the end of 2016. However, despite these impressive numbers, Empresaria trades on a forward-looking P/E of just 10.1 and an EV-to-sales ratio of a low 0.32.

With only 32% of revenue last year coming from the UK, the company's geographic diversification adds weight to the investment thesis. Furthermore, management appears to be bullish on future prospects, recently stating "we continue to see exciting growth opportunities to develop our group and deliver increased profits and we look to 2017 with confidence." Therefore, given the low valuation of the shares, Empresaria looks to be an excellent value stock in my opinion.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.