As we bid farewell to December and step into January’s promising terrain, the previous quarter’s market successes linger in the air. Projections of a continued bullish trend persist, painting a favourable backdrop for investors seeking to position themselves strategically to take advantage of the unfolding opportunities in early 2024: robust companies whose shares are still undervalued.
These 5 stocks are our top Pro Picks for this month, taken from FTSE 250-listed companies that have garnered high InvestingPro health ratings (benchmarked against more than 100 financial factors and indicators from companies in the same sector), as well as from among those trading well under our proprietary fair value estimates (based on 5 overlaid investing models) and analyst assessments.
All of these names have earned InvestingPro health scores of well above 2.75, which is a score that points to first-rate financials: excellent earnings, cash flow, and growth vs. peers in its sector.
Top January Stock | InvestingPro Health Score |
---|---|
3i Group (III) | 3.79 / 5 |
TBC Bank Group (TBCG) | 3.01 / 5 |
Morgan Sindall Group (MGNS) | 3.02 / 5 |
Computacenter (CCC) | 3.33 / 5 |
Rio Tinto (RIO) | 3.08 / 5 |
Importantly, all of these stocks are also currently undervalued per InvestingPro’s fair value calculations and favored by Wall Street analysts polled by InvestingPro. So if you’re eager to bulk up your portfolio, these overlooked powerhouse plays are all worth serious consideration alongside your additional due diligence research.
3i Group (III):
- InvestingPro health score: 3.79 / 5.00
- InvestingPro fair value: £31.68 / 34.5% upside
- Fair value confidence: Medium
- Industry: Financials / Capital Markets
3i Group (LSE: III) has exhibited a strong return on invested capital over the last few years, with a notable increase from 13.2% in FY2019 to 25.2% in FY2022, reflecting robust operational efficiency and profitability. Similarly, the return on common equity has shown a remarkable upward trend from 16.6% in FY2019 to 30.9% in FY2022, further underlining the company’s strong financial performance.
The Piotroski Score, a measure of financial strength, has demonstrated consistent improvement, recently reaching 5, signifying strong financial health. Analyst targets have indicated varying upside potential, with substantial upside in FY2020, FY2022, and through to FY2023, while experiencing a slight downside in FY2019 and FY2021. Notably, the debt-to-equity ratio has shown a declining trend, reaching 4.7% in FY2022, indicating a favourable capital structure and reduced financial leverage.
In terms of valuation, the P/E ratio has exhibited a declining trend, reaching 4.0x in FY2022, suggesting that the stock may have become more attractively valued relative to its earnings. The current stock price stands at £23.55 as of January 2nd, 2024, reflecting the most recent valuation of the company’s shares. Additionally, 3i Group is a member of the FTSE 100 index, underscoring its significance in the U.K. market.
3i Group’s strong financial metrics, consistent market capitalisation, and notable presence in the FTSE 100 index reflect its position as a stable and potentially attractive investment opportunity.
TBC Bank Group (TBCG):
- InvestingPro health score: 3.01 / 5.00
- InvestingPro fair value: £32.38 / 16.7% upside
- Fair value confidence: Medium
- Industry: Financials / Banks
Since 2018, TBC Bank Group (LSE: TBCG) has exhibited a strong return on invested capital, with a notable increase from 8.4% in FY2018 to 11.9% in FY2022, reflecting robust operational efficiency and profitability. Similarly, the return on common equity has shown a remarkable upward trend from 21.4% in FY2018 to 27.3% in FY2022, further underlining the company’s strong financial performance.
The Piotroski Score, a measure of financial strength, has demonstrated consistent improvement, reaching 5 in FY2021 and FY2022, signifying strong financial health. Analyst targets have indicated varying upside potential, with substantial upside in FY2018 and FY2019, while experiencing a slight downside in FY2021 and FY2022. Notably, the debt-to-equity ratio has shown a declining trend, reaching 147.3% in FY2022, indicating a favourable capital structure and reduced financial leverage.
In terms of valuation, the P/E ratio has exhibited a declining trend, reaching 4.2x in FY2022, suggesting that the stock may have become more attractively valued relative to its earnings. The current stock price stands at £27.80 as of January 2nd, 2024, reflecting the most recent valuation of the company’s shares.
TBC Bank Group’s strong financial metrics, consistent market capitalisation, and notable improvements in return on invested capital and return on common equity underscore its position as a stable and potentially attractive investment opportunity.
Morgan Sindall Group (MGNS):
- InvestingPro health score: 3.02 / 5.00
- InvestingPro fair value: £30.12 / 37.7% upside
- Fair value confidence: Medium
- Industry: Industrials / Construction & Engineering
Returning for another month in our top picks, Morgan Sindall Group (LSE: MGNS) has shown a varying trend in return on invested capital, with a notable increase from FY2020 to FY2022, reflecting improved operational efficiency and profitability. Similarly, the return on common equity has exhibited fluctuations over the years, indicating changes in the company’s financial performance.
The Piotroski Score, a measure of financial strength, has shown relatively strong performance, ranging from 5 to 7 over the past five years, signifying a solid financial position and operational performance. Analyst targets have indicated varying upside potential, with substantial upside in FY2018 and FY2022, while experiencing a downside in FY2019. The debt-to-equity ratio has fluctuated over the years, indicating changes in the company’s capital structure and financial leverage.
In terms of valuation, the P/E ratio has shown fluctuations, suggesting changes in the market’s perception of the company’s earnings. The current stock price stands at £21.88 as of January 2nd, 2024, reflecting the most recent valuation of the company’s shares.
Overall, Morgan Sindall Group has exhibited stability in market capitalisation, varying financial performance metrics, and a potential upside in its valuation, which investors should consider along with other relevant factors before making investment decisions.
Computacenter (CCC):
- InvestingPro health score: 3.33 / 5.00
- InvestingPro fair value: £35.04 / 27.5% upside
- Fair value confidence: High
- Industry: IT Services
Another returning equity for this month, Computacenter (LSE: CCC), a leading provider of IT infrastructure services, presents an opportunity for investors seeking exposure to the technology sector.
With a market capitalisation of approximately £3.15 billion as of January 2024, Computacenter has demonstrated resilience and growth potential in the rapidly evolving IT landscape. While the company has a modest dividend yield of 2.48%, its price-to-earnings (P/E) ratio of 16.3x reflects a favourable valuation relative to its industry peers. Additionally, Computacenter maintains a manageable total debt of £137 million (down from £187 million in Q3 of 2023), indicating a relatively healthy balance sheet. InvestingPro’s fair value analysis suggests a potential upside of 27.5%, signalling an attractive growth opportunity for investors.
Despite the inherent volatility in the technology sector, Computacenter’s strategic positioning and solid financial metrics position it as a compelling continued stock pick for January. As technology continues to drive innovation and digital transformation across industries, Computacenter’s role as a key IT solutions provider underscores its potential for long-term growth and value creation in the market.
Rio Tinto (RIO):
- InvestingPro health score: 3.08 / 5.00
- InvestingPro fair value: £61.83 / 5.1% upside
- Fair value confidence: High
- Industry: Materials / Metals & Mining
The Rio Tinto PLC (LSE: RIO) current fair value upside is reported to be 5.1%, indicating room for value-gains for investors in addition to their current dividend yield of a solid 5.5%. The company has shown a varying trend in return on invested capital, with a notable increase in FY2021, reaching 30.3%, reflecting improved operational efficiency and profitability. Similarly, the return on common equity has exhibited fluctuations over the years, indicating changes in the company’s financial performance. The Piotroski Score, a measure of financial strength, has shown a decline in FY2022, reaching 3, signifying a potential slight deterioration in financial health, but still with an overall positive outlook.
In terms of analyst targets, there has been varying upside potential, with substantial upside in FY2018 and FY2021, while experiencing a downside in FY2019 and FY2022. The debt-to-equity ratio has shown a declining trend, reaching 24.5% in FY2022, indicating a favourable capital structure and reduced financial leverage. The P/E ratio has also exhibited fluctuations, suggesting changes in the market’s perception of the company’s earnings. The current fair value price stands at £61.83 as of January 2nd, 2024.
In recent news, Rio Tinto has received a series of rating upgrades from major financial institutions, indicating an optimistic outlook on the firm’s stock performance. Notably, the company has announced a significant investment plan in the Simandou iron ore project in Guinea, highlighting its commitment to growth projects. Additionally, the approval of a pre-feasibility study for the Rhodes Ridge project in Western Australia underscores Rio Tinto’s focus on expanding its operational capacity.
The comprehensive financial metrics, analyst targets, and recent news highlight the dynamic nature of Rio Tinto’s financial performance and its strategic initiatives for future growth.
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Previous Investing Stock Picks for U.K. Markets
If you’re looking for more great opportunities, here is a list of our top stock picks for previous months.
Remember 📌
The health scores and these stocks’ place on our opportunities list were correct at the time of original posting month. It’s important for investors to check any updated information, which can be done at the click of a button through InvestingPro.
Top December Stock | InvestingPro Health Score |
---|---|
Greggs (GRG) | 3.13 / 5 |
Morgan Sindall Group (MGNS) | 3.04 / 5 |
Kaspi.kz AO (KSPI) | 3.73 / 5 |
Computacenter (CCC) | 3.37 / 5 |
Bellway (BWY) | 3.17 / 5 |
Top November Stock | InvestingPro Health Score |
---|---|
Greggs (GRG) | 3.26 / 5 |
4Imprint Group (FOUR) | 3.53 / 5 |
Clarkson (CKN) | 3.61 / 5 |
Nationwide Building Society (NBS) | 3.34 / 5 |
RHI Magnesita NV (RHIM) | 3.24 / 5 |
Remember 📌
Past performance does not guarantee future success, and trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Trading on margin increases the financial risks. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.