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Two value stocks that I plan to buy next time I have some cash to invest are Coca-Cola HBC (LSE: CCH) and Sure (LSE: AGR).
Here's why!
Bottling of effervescent drinks
You'd be forgiven for thinking that Coca-Cola HBC is actually the main Coca-cola It's not a business, but it still plays an important role for the beverage powerhouse as it is one of its main bottling partners for many of its favorite brands around the world.
If we go by Coca-Cola HBC's valuation, the stock is trading at a price-to-earnings ratio of 14. This is significantly lower than the core business, which trades at a ratio of over 22. Accessing Coca-Cola's brand power and reach through one of its partners at a cheaper price is tempting.
Additionally, the stock offers a dividend yield of 3%. This may not seem like the highest, but the company's track record of dividend growth over the past few years is excellent. If this trend continues, the payout level could be fantastic in the years to come. However, I understand that dividends are not guaranteed. Also, the past is no guarantee of the future.
From a bearish perspective, there are a couple of issues that concern me. The first is the potential impact of economic turmoil on earnings as consumers have to cope with higher costs of living. This could cause people to move away from premium brands such as CokeThe other is the growing popularity of weight loss drugs. GP-1which could curb the desire to consume sugary drinks. This could affect performance and profitability. I will keep an eye on this.
Overall, Coca-Cola HBC has access to the great power of the Coca-cola Brand, including its broad presence and enduring popularity. Buying shares could be a great way to help me build wealth.
Health care properties
Assura is incorporated as a real estate investment trust (REIT). This means it makes money from real estate assets and is required to return 90% of its profits to shareholders. Assura specializes in healthcare properties, such as medical offices and other healthcare-related services.
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The company's composition and profitability policy make for an attractive prospect to help generate wealth. However, the stock also seems to have an excellent price-to-book ratio at present of 0.85, which is good.
Furthermore, the business has a defensive aspect which makes the stock more attractive to me. Healthcare is essential for everyone, regardless of the economic outlook. Furthermore, as the UK population is ageing and growing, the demand for healthcare should only increase. This gives Assura the opportunity to grow earnings and returns.
Finally, from a profitability perspective, a dividend yield of around 8% is tempting. To put this into context, the FTSE 100 index average is 3.6%.
From a bearish perspective, economic turbulence in the form of higher interest rates and inflation is potentially a big risk for Assura. Higher rates mean that net asset values (NAVs) of properties have shrunk. Also, debt is more expensive to obtain for growth, and existing debt could be more expensive to service. Debt is key for REITs to fund growth. I'll keep an eye on this.
Overall, Assura stock is excellent value for money, offers a great payout level and operates in a defensive sector. Who wouldn't like it?
