3 quality value stocks to buy
The top stocks to buy now, according to Liontrust European Dynamic Fund’s Samantha Gleave.
If you’re thinking about which stocks to buy now, then according to Samantha Gleave, the manager of Liontrust’s European Dynamic Fund, it might be worth considering undervalued high-quality stocks.
Contrarian value investment opportunities tend to perform well in the long term, says Gleave, especially those with depressed investor sentiment.
Liontrust uses an “investor-anxiety indicator,” which has been an “ effective gauge of market inflection points” in the past.
Today, it’s using this gauge to uncover stocks that appear cheap compared to their growth potential.
Here are three stocks to buy today based on this methodology.
Stocks to buy now
According to Gleave, here are the top stocks to look at now:
Stocks to buy for the recession: Pandora
Liontrust bought Danish jewellery company Pandora (Copenhagen: PNDORA) at the beginning of the pandemic when lockdowns forced the company to close most of its physical retail outlets.
“As economies began to reopen after Covid-19”, investor anxiety around Pandora started to ease, and the shares recovered rapidly.
Today, the company is facing a different but not dissimilar operating environment. Over the past year the stock has lost around half of its value due to concerns about consumer confidence.
Indeed, Liontrust’s “anxiety indicator has climbed back to a very high level.” This suggests now could be a good time to revisit this high-quality stock.
An healthcare leader: Novo Nordisk
Gleave notes this company “generates a high cash return on capital, and is reporting strong business momentum.”
It’s also achieving strong organic revenue growth thanks in part to its “market-leading position” in the treatment of diabetes patients.
Novo is developing a pipeline of assets for obesity treatments and other serious chronic diseases, funded with cash flow from operations.
As well as these growth characteristics it is “ returning cash to shareholders via dividends and share buyback programmes.”
Growing income as rates rise: Bank of Ireland
Liontrust first bought Bank of Ireland (LON: BIRG) in 2020 as a “contrarian value stock” and it still thinks the shares are undervalued today.
Growing income from higher interest rates, a “stronger balance sheet” and an attractive valuation are all reasons why the firm continues to own the stock today, Gleave says.
There’s also the “potential for higher capital returns for shareholders” as the bank’s bottom line continues to expand.