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I think these are cheap FTSE 250 The stock could be too cheap to miss at current prices. Here's why I think investors looking for high-value stocks should seriously consider them.
centamine
Having exposure to gold can be a great way for investors to diversify and reduce risk. When times get tough and financial markets tank, safe haven gold often rises in price and offsets weakness in other parts of an individual's portfolio.
I think investing in gold stocks is a great way to do this. Unlike physical gold or a product that tracks metal prices like an exchange-traded fund (ETF), many mining companies also provide income in the form of dividends.
To this end, centamine (LSE:CEY) is a UK stock on my own radar today. Its dividend yield stands at a solid 3.2% by 2024.
Mining stocks can also provide better returns than gold or gold-backed financial instruments if they can demonstrate continued operating strength. The successful expansion of its flagship Sukari mine in Egypt, positive exploration work elsewhere in Africa and tight cost control suggest to me a stock with bright investment potential.
Earnings from commodity stocks are notoriously volatile given their sensitivity to commodity prices. But despite this risk, I think Centamin stock is an excellent buy.
This is not just due to the overall cheapness of the miner. In addition to providing that healthy dividend yield, it trades on a forward price-to-earnings (P/E) ratio of 8.7 times.
It is also due to the possibility that gold prices will continue to rise. The yellow metal hit another all-time high of $2,222.39 an ounce on Thursday (March 21).
City analysts certainly believe Centamin's share price will continue its recent rapid rise. The 11 analysts with ratings on the miner have set a 12-month price target of 203 pence per share. That's a big premium to current levels of 111p.
UK Wind Greencoat
Renewable energy stock UK Wind Greencoat (LSE:UKW) also looks hugely undervalued in my opinion.
Its P/E ratio of 25.8 times may not seem too attractive to investors. But at 135.6 pence per share, it is trading at a double-digit discount to its estimated net asset value (NAV) per share of 162.9 pence.
Greencoat's seven rated brokers also believe its share price will reach 178.8p per share in the next 12 months.
And finally, the wind energy specialist offers a tasty dividend yield of 7.4% at current prices. That's more than double the 3.5% average of FTSE 250 shares.
The profits of renewable energy producers tend to be more volatile than those that use fossil fuels. In the case of Greencoat, power generation may decrease during calm conditions. Building turbines and keeping them running can also be enormously expensive.
However, I would gladly accept some volatility if a stock's long-term prospects are bright. And I think Greencoat, which operates dozens of onshore and offshore wind farms, could deliver strong earnings growth as the world transitions from oil and gas to cleaner energy sources.
