With the market charging notably higher over the last 12 months, many of the most popular shares are now trading on higher than normal valuations.
Luckily for value investors, not all shares are trading at a premium. In fact, some could even be described as dirt cheap at current levels.
Here are three shares which I think would be good options for value investors:
Accent Group Ltd (ASX: AX1)
Accent Group is the footwear-focused retail group behind retail brands including HYPE DC and Platypus. Its shares are currently changing hands at 14.5x estimated full year earnings, which I think is cheap considering earlier this year it posted a 27.3% increase in first half net profit after tax to $32.2 million. This was driven by a combination of strong digital sales growth and margin improvement. Another bonus with Accent Group is that its shares provide a very generous trailing fully franked 5.75% dividend yield.
Adairs Ltd (ASX: ADH)
Adairs is another retail share which I think is trading at a very attractive price. At present the home furnishings retailer’s shares are trading at just 11x trailing earnings. This is despite the company posting strong sales and earnings growth in the first half and providing positive full year guidance. Management expects EBIT of up to $50 million in FY 2019, which will be a year on year increase of 10.4%. As with Accent Group, Adairs also provides a very generous trailing fully franked 7.1% dividend yield.
Aristocrat Leisure Limited (ASX: ALL)
This global gaming technology company’s shares have risen strongly over the last few weeks but still trade at a reasonable 22x estimated full year earnings. I think this makes Aristocrat Leisure a great example of growth at a reasonable price. After all, following FY 2018’s blockbuster result, the company recently posted a 29.8% increase in first half operating revenue to $2,150.3 million and a 16.8% lift in normalised EBITA to $644.4 million. I expect similarly strong growth over the coming years thanks to its industry-leading core pokie machine business and its exposure to the rapidly growing digital and social gaming market.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.