Looking for top value shares to buy in a Stocks and Shares ISA? You’re in luck. Whether you’re seeking rock-bottom price-to-earnings (P/E) ratios or high dividend yields, there’s plenty of white-hot UK stocks to choose from today.
Take Lion Finance (LSE:BGEO), for instance. This FTSE 100 share has rocketed in value over the last 12 months. Yet it still offers stunning value based on predicted earnings.
So what exactly makes it a top stock for ISA investors to consider?
Up 737%!
Lion Finance shares have soared 67% over the last year. Over five years, the company’s increased a staggering 737% in value! It’s carried the emerging market bank all the way into the FTSE 100 in May.
That last sentence might give you a clue as to why. So might the stock’s former name Bank of Georgia. Like fellow Footsie banks HSBC (Asia) and Standard Chartered (Asia and Africa), it’s focused on regions where financial services demand is surging from a low base.
Lion Finance is, along with TBC, one of the two dominant names in Georgia’s banking sector. As such, revenues and profits are surging as its citizens become wealthier. Group operating income and profit leapt 15.7% and 14% respectively in the last quarter, as its Georgian customer base grew to 2.2 million (up 9.7%). The business also has operations in Armenia.
What’s the catch?
The question is, can earnings maintain their impressive trajectory? Admittedly, it could experience a few bumps if the Iran war persists and economic growth cools, hitting loan growth.
But talking long term, I’m expecting profits to keep rising strongly, as healthy overseas investment and growth sectors like tourism, IT and logistics boost Georgia’s economy. It’s a view shared by the IMF — it expects Georgia’s real GDP per capita to increase 61% in the seven years, to 2031.
What’s more, Lion Finance has a cash-rich balance sheet it can use to capture these opportunities. Its Common Equity Tier 1 (CET1) ratio was an impressive 17.9% as of March. This gives it scope to continue expanding into digital banking, not to mention explore further regional expansion if it so chooses.
Turning £20,000 into..?
I don’t think Lion Finance’s dirt cheap share price today reflects its attractive investment case. The bank trades on a forward P/E ratio of 7, making it the FTSE 100’s cheapest banking stock based on expected earnings.
In my view, this low ratio provides scope for further substantial share price growth. It’s a view that City experts share — the average 12-month forecast for Lion Finance shares among forecasters is £13.10 per share.
That represents an increase of 19% from today’s levels. With expected dividends combined, it suggests the FTSE bank will deliver a total return of 21.8% over the next year.
If this is accurate, £20,000 worth of shares bought today in a Stocks and Shares ISA will generate a stunning £24,360 by next June. It’s not without risk but, on balance, Lion Finance’s one of the best value shares to consider.
Should you invest £5,000 in Lion Finance Group Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lion Finance Group Plc made the list?
Royston Wild owns shares in HSBC.
