Image source: Getty Images
September’s shaping up to be an interesting month for UK stocks. The market’s looking at little hot in places, with FTSE 100 banking stocks and several others performing really well. However, here are some overlooked names that could be worth closer scrutiny.
Melrose Industries
Let’s start with Melrose Industries (LSE:MRO). The FTSE 100 share’s my largest holding. The aerospace firm trades on a forward price-to-earnings (P/E) ratio of 15.3 while management’s guiding for annual earnings growth above 20% through to 2029.
As such, on a price-to-earnings-to-growth (PEG) basis, Melrose looks even better value at 0.75, compared with Rolls-Royce and GE at over two.
There was real momentum in the H1 results, with adjusted diluted EPS up 30% to 15.1p on the back of strong aerospace demand. What’s more, the company has a great moat, with sole-supplier status across much of its aerospace division.
Net debt of £1.4bn remains a risk, as do sector cyclicality and supply chain issues. However, I believe Melrose offers one of the strongest growth profiles in the FTSE 100 today. If it can deliver on management promises, we may see it take off like Rolls.
Synectics
Next is Synectics. It’s a small-cap AIM stock in surveillance and security trading at 12.2 times forward earnings. The earnings forecast sees the P/E fall steadily to under 10 by 2027, while dividend yields are expected to rise from 2.3% this year to 3.3% in 2027.
Recent results showed revenue up 35% and EPS growth of 59%, helped by contracts with West Midlands Police and an Asian resort. Risks include a reliance on larger contracts and wide bid-ask spreads. Still, Synectics’ strong balance sheet (£12.1m net cash) and growth make it an under-the-radar candidate.
Jet2
Jet2 also stands out for its fortress-like balance sheet. The forward P/E for 2025 is just 7.8, with enterprise value-to-EBITDA at only 1.4 once net cash is considered. Analysts remain bullish, with targets 31% above the current share price. A slightly older fleet explains part of the discount, but with a fleet overhaul under way, Jet2 looks cheap for a profitable, cash-rich airline. Investors should keep an eye on staff costs following the Budget.
Journeo
Like Synectics, here’s another minnow. Journeo is an AIM-listed transport technology firm executing a disciplined growth strategy. H1 revenue fell 4%, but that appears to reflect one-off project timing. Its Fleet Systems revenue rose 46% and net cash reached £18m, representing around 30% of its market-cap. With a forward P/E of 14 and EV/EBITDA of six, Journeo looks reasonably priced given its growing pipeline. Contract concentration and large spreads are risks worth noting.
Arbuthnot
Finally, Arbuthnot‘s an AIM-listed bank that trades at just 0.59 times book value, with a forecast P/E of nine and a dividend yield above 5%. Despite H1 profits falling, deposits, lending, and assets under management all grew strongly. Net assets per share stand at £16.49, well above the current £10.10 share price. For banks, size does matter. As a result, there could be more perceived risk around this minnow. However, that’s arguably reflected in the price.
