The ‘value’ stocks that look worth a punt

GKN

This global engineering group designs, makes and distributes drive shafts to the car industry and have clients such as BMW. It has also been doing very well out of the airline business, buying the Volvo Aero business for £633m in July last year.

It has seen quite a shift up in orders from Boeing and Airbus and that is something we expect to continue.

The most recent results were very impressive, although earnings were down slightly because of tax. There is the opportunity for growth there because the company supplies top of the range companies around the globe and as global growth picks up we expect to see expansion.

Share price: 352.80p (as at August 1 2013)

BP

This business is going through a process of selling off oil fields where the margins have shrunk and the production is no longer as attractive. It is looking to take on partnerships in areas that look a lot more interesting.

This stock is a little bit contensious as a buy because it has had ongoing problems in Russia and is at the sage now of looking at how it can build up the business and get rid of the non-quality assets. However, we think that if you are willing to take the risk at this stage, you should see pretty reasonable returns in the years ahead. Its share price slipped recently based on its earnings, so it is probably a good entry point, but you have to be comfortable taking the risk with BP.

Share price: 453.90p (as at August 1 2013)

BHP Billiton

Miners have been having a pretty torrid 18 months and we have see slowing growth in China which is impacting these companies. BHP Billiton is one of the more dverse miners and although miners have been seeing high price to earning ratios, we expect that to shift next year.

With prices getting to where they are, we expect the next 6-12 months could see an uptick in the sector which will have more of an affect on the bigger players rather than the smaller players. That really comes down to how the currencies are working with the sector which tends to make it extra cheap for companies like BHP Billiton to build up stock reserves.

Share price: 1906.50p (as at August 1 2013)

BT

Everyone knows of BT as a ‘fixed line’ business and it has good and bad reports. The management team are looking to drive a better global business and with the uptake of the data services and the role of the super-fast broadband, we could see some good numbers coming out as it go head to head with the likes of Sky.

The subscription to the football services, which is driven by the uptake in broadband, is interesting and BT is one of those companies where you have got to be in now and wait to see what numbers come through. If you wait until those numbers, you will be too late.

Share price: 340.90p (as at August 1 2013)

Hill & Smith

This industrial engineering company hasn’t yet appeared on our buy list, but we are looking at it from the point of view that the governemnt is going to fast track a couple of projects, mainly those that deal with road and rail development. That leads into infrastructure and this company that has interests in the US and regions in the Middle East.

Hill & Smith is currently trading on a PE of 11 times and a forward PE of 10 times. It also gives off a good level of income and we could see this company do very well.

Share price: 432.25p (as at August 1 2013)