I am convinced that these two top-class FTSE value stocks are a real buy!

Two value stocks that I will buy as soon as I have investable funds are Centrica (LSE: CNA) and Beazley (LSE: BEZ).

Here’s why!

Centrica

The owner of British Gas has had mixed success recently, in my opinion. Higher gas prices have filled the coffers, but at the same time the associated volatility has not helped the share price.

Over a 12-month period, shares have risen 12%, from 124 pence at the same time last year to the current level of 139 pence.

I am sure that the shares look really dirt cheap and that Centrica looks like a clear buy for me and my shares.

Currently, the shares are trading at a price-to-earnings ratio of two, which is a rock-bottom price. Yes, you read that right. Of course, I realize that cheap doesn’t necessarily mean good value for money. However, there are too many positive aspects about the company, at least in my opinion.

First, a dividend yield of just under 3% is decent from an investor’s perspective and would help me increase my passive income streams. However, I realize that dividends are never guaranteed.

As one of the UK’s largest gas and electricity suppliers with over 10 million customers, the company is in an excellent position. This dominant market position, coupled with extensive experience and a track record, is enviable. However, I also recognise that past performance is no guarantee of future performance.

Despite my optimistic view, I must point out risks that could affect future earnings and returns. First, the transition to greener, cleaner energy could severely impact the currently solid balance sheet.

The other problem is the lack of pricing power, as the country is dependent on wholesale gas prices. I will keep an eye on geopolitical issues – as we have seen recently – and the cyclical nature of this development.

Beazley

If you ask me, Lloyd’s of London’s Beazley insurance company is a little gem among the hidden gems. For the uninitiated, it deals with specialty insurance risks and reinsurance. Not exactly exciting stuff. Fortunately, I want my investments to grow and not get excited about the nature of the business.

The story goes on

The shares have had a good run over the last 12 months, rising 12% in that period, from 588p to the current level of 657p.

From a valuation perspective, the stock’s price-earnings ratio is only 6.7, which is attractive. In addition, a dividend yield of 2% and continuous share buybacks make it an attractive investment.

Recent performance reports, including a Q1 update, have given the company and its shares a huge boost. This has led to several analysts rating the stock a “buy”, including RBC.

However, from a pessimistic perspective, one of the biggest risks for me is the possibility of a deterioration in the geopolitical situation as well as an external catastrophic event – let’s take Covid for example – that could occur. These issues could affect the earnings and also the potential returns of the company.

The post “I think these two top-notch FTSE value stocks are a definite buy!” appeared first on The Motley Fool UK.

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Sumayya Mansoor does not own any of the stocks mentioned. The Motley Fool UK does not own any of the stocks mentioned. The views expressed in this article about the companies mentioned in this article are those of the author and as such may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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