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As we begin October, many stock market indexes are near all-time highs. But that doesn't mean there aren't cheap stocks to buy. If you look at the indices, there are many companies that are still trading at bargain rates. With that in mind, here are three value stocks to consider today.
Prudential
First, we have it Prudential (LSE: PRU). It is an insurance company that focuses on markets across Asia and Africa.
I own this stock in my portfolio and it has been a dog lately. The main reason for this is that economic conditions in China have been very weak (which has led to less demand for financial products).
China is now taking serious steps to improve its economy, however. Last week, it announced a number of incentives to help consumers, so things are looking up for insurance.
Currently, the price-to-earnings (P/E) ratio here using next year's earnings forecast is just 9.2. In that iteration, I see a large number on the table (the FTSE 100 average is around 14).
China remains vulnerable here in the short term (government stimulus may be needed). But from a long-term perspective, I think this stock has the potential to deliver attractive returns in the coming years given today's low valuation.
eBay
Next we will have a US listed stock, eBay (NASDAQ: EBAY). It runs one of my favorite online shopping sites.
No one is really paying attention to this stock yet. And that's why I see an opportunity here.
Currently, it is very cheap. Today, the P/E ratio is just 12.6 using next year's earnings forecast (miles below the US market average).
At that time, the company buys back a large amount of its own shares. This purchase should increase earnings per share, which in turn will increase the (already healthy) share price.
It's worth pointing out that eBay operates in a very competitive industry. Competition from the likes of Amazon and Temu is dangerous.
eBay is making moves to expand its user base (it recently announced free sales for UK users). And I believe that at today's price, a lot of risk is already priced into the stock.
HSBC
Finally, check out the global banking giant HSBC (LSE: HSBA). It currently trades at a bargain-basement P/E ratio of just 7.2.
I tend to stay away from bank stocks because banking is a volatile industry. But this bank looks very interesting to me.
Another reason for this is that HSBC is expanding its wealth management business. Over the next five years, the bank plans to double UK assets under management to around £100bn (this would make it one of the top five asset managers in Britain) as investors move away from independent financial advisers (IFAs).
Wealth management can be a very lucrative market for banks. It could also increase significantly (consumer goods are likely to rise as global stock markets rise) and help boost growth.
Of course, the economic problems in China (and around the world) are dangerous here. Another risk is competition from new digital banks like Revolut.
I like the risk/reward bias at the current low rate, though. A dividend yield of around 7% adds weight to the investment case.
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