2 bargain value stocks I'd buy right now

Royal Mail deliveries

Just Group(LSE: JUST) was flatlining in Wednesday trade following a muted response to half-year financials.

Still, the pensions giant remained locked around recent record peaks above 160p per share, and I fully expect it to remain a well-bought share in the weeks and months to come.

Just Group advised today that underlying operating profit shot 49% higher during January-June, to £100.6m, while new business profit more than doubled year-on-year to £64m.

The Reigate company saw retirement income sales boom 16% during the first half, while new business margins also picked up to 8.9% from 5% in the corresponding 2016 half.

And chief executive Rodney Cook struck an upbeat tone looking ahead, commenting that "the outlook remains favourable for each of our key businesses. We expect the Guaranteed Income for Life (GIfL) market to continue to grow, driven by demographics, individual customer defined benefit pension scheme transfers, and continued growth in shopping around."

He added that "the defined benefit de-risking market is set for more rapid expansion as trustees seek to assure the benefits of their members," while "the LTM [lifetime mortgage] prospects remain positive as a property rich, but pension poor, generation prepares to retire."

Just too cheap

Just Group's positive outlook comes as no surprise given the ample revenues opportunities created by its broad suite of retirement options, demand for which should continue to step steadily higher on account of Britain's rapidly-ageing population.

The City certainly expects earnings at the business to keep creeping higher, and its army of brokers have chalked in bottom-line growth of 4% and 19% in 2017 and 2018 respectively.

And current estimates make Just Group stunning value for money, the company sporting a forward P/E ratio of 11.6 times, comfortably below the widely-regarded value benchmark of 15 times. I consider this to be far, far too low to pass up given the financial star's vast structural opportunities.


While an economic slowdown in Britain and terminal decline in the letters segment may cause some near-term choppiness over at Royal Mail (LSE: RMG), I am convinced the long-term picture remains pretty rosy.

Britain's oldest courier advised in July that while UK letter and parcels revenues slipped 1% in the three months to June 25th, its GLS pan-European division continued to be a star performer. Royal Mail noted that its continental division "continues to be a driving force for the Group... its ongoing, focused international expansion is increasing our geographic diversification, scale and reach." The arm grew revenues and volumes by 5% and 6% respectively in the three-month period.

The number crunchers expect Royal Mail to suffer a 16% earnings slippage in the 12 months ending March 2018, although it is expected to get profits rolling higher again in the following year. A 2% improvement is anticipated.

And current numbers make the business exceptional value, in my opinion, the parcels powerhouse sporting a forward P/E rating of just 10.1 times. When you also chuck vast dividend yields of 6.4% and 6.7% for fiscal 2018 and 2019 into the bargain, I reckon investors should consider capitalising on recent heavy share price weakness at Royal Mail.

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Royston Wild has no position in any of the 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.

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