Yesterdays market turbulence threw up plenty of opportunists for value investors with a long-term investment horizon. Here are five top picks.
Misunderstood
Amec Foster Wheeler (LSE: AMFW) is one of Londons most misunderstood companies. As an engineering company with ties to the oil sector, investors have turned their backs onAmec, believing that the companys earnings will slump along with the price of oil.
However, Ameccontinues towin new engineering projects both in, and outside the petroleum sector. Revenue dipped by 0.9% during thefour months ending April 2015,but the groups order book increased to 6.7bn, which is more than a years worth of revenue.
Whats more, Amecslow valuationfails to take the companys robust order backlog into account. The company currently trades at a forward P/E of 10 and supports a yield of 6.2%.
Time to buy
Irecently advised sellingBAE (LSE: BA), because the company looked expensive compared to its international peer group. But after recent declines, BAE now looks to be cheaper than its international peer group.
For example, BAEs main peers, the likes ofGeneral Dynamics,Lockheed Martin,Northrop GrummanandRaytheon Co, trade at an average forward P/E of 14.5 compared to BAEs forward P/E of 11.5. Further, BAE currently supports a dividend yield of 4.7%, and the payout is covered 1.8 times by earnings per share.
Defensive play
Shares ofA.G. Barr(LSE: BAG), the soft drinks group, have declined by around 20% over the past six months, presenting an attractive opportunity for value investors. Barr is a slow-and-steady growth stock. During the past three years, pre-tax profit has increased by a third and earnings per share are forecast to rise by 6% per annum for each of the next three years.
Unfortunately, as A.G. is a defensive business with years of steady growth ahead of it, the companys shares trade at a premium to the wider market. Still, A.G.s shares are now cheaper than they have been at any point during the past year. The company currently trades at a forward P/E of 19.6 and supports a dividend yield of 2.1%.
Chinese exposure
Burberry (LSE: BRBY) has lost a third of its value since the end ofFebruaryas investors fret about the companys exposure to China. Indeed, according to City figures, Burberrys earnings will stagnate this year but for investors with a long-term outlook now is the perfect time to buy Burberrys shares.
Burberrys shares are cheaper now than they have been at any point during the past decade. In particular, Burberry currently trades at a forward P/E of 17.8, compared to its ten-year average of 19.5.
City analysts expect the company to return to growth next year, and this should send Burberrys valuation back to its ten-year average. Burberrys shares currently support a dividend yield of 2.7%.
Record growth
Johnson Mattheys(LSE: JMAT) growth is expected to slow to a crawl this year. Nevertheless, over the past five years the company has achieved one of the best growth records of any FTSE 100 company.
Johnson Mattheys earnings per share expanded 52% since 2011, and with this record of growth behind it, the companys shares have traditionally traded at a high valuation.
However, like Burberry, after recent declines Johnson Mattheys shares are now cheaper than they have been for five years. The company currently trades at a forward P/E of 14.7.
Buy and forget
If these companies aren’t your cup of tea, our top analysts here at The Motley Fool have recently identifiedfive other bargains that have been unearthed by the market’s turbulence.
In fact, we’re so upbeat about the upbeat about these companies’ outlooks that we’ve branded them the5 Shares You Can Retire On!
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
