AO World tops the list of the FTSE 350’s most undervalued companies


US investors are seeing their indices hit new highs, but British investors have to get a bit innovative to prosper.

Now, it’s not always wise to take brokers’ views as gospel as some of them might be talking up their own book but it can be educational to see which stocks are currently trading at a discount to the consensus target price.

Among the FTSE 350 companies, online white goods seller AO World PLC (LSE:AO.) is currently ranked as the most undervalued stock.

Last night’s closing price was 141p whereas the consensus (median) target price among the six brokers who follow the stock is 322p, which suggests a 128% upside.

Last month the company saw its shares take a bath as it became the latest company to warn of supply chain hitches, while also bemoaning “challenging market dynamics” in both the UK and Germany.

However, the stock has a “compelling long-term growth story” and is set to benefit from recent market shifts, according to analysts at Jefferies.

Spotted among the top 20 most undervalued stocks are a number of obvious recovery plays – stocks that were knocked for six by the pandemic.

The Restaurant Group PLC has 61% upside according to the broking community, presumably on the basis that the British consumer will rediscover the joys of eating out.

In a similar vein, Mitchells & Butlers (LSE:MAB) PLC is tipped to rise 42% over the next 12 months (the normal timeframe for price targets) as pub life gets back to normal while Cineworld Group PLC (LSE:CINE) is seen advancing 44% as the popcorn munchers return.

Coaches operator National Express Group PLC (LSE:NEX) is another that seems likely to benefit from something resembling a return to normality; its price target is 338p, compared to last night’s closing price of 234p.

Here’s the list of the FTSE 350’s 20 most undervalued (ostensibly) companies.


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