Value investing is finding opportunities to buy shares when they’re unusually cheap. But this isn’t always straightforward.

At the moment, I think there are a couple of UK stocks that might be worth looking at. They don’t look like bargains at first sight, but a closer inspection suggests there might be value here.

Carnival

A lot of the best-performing UK stocks of the last few years have been Covid-19 recovery stories. But cruise line business Carnival (LSE:CCL) hasn’t been one of them.

The stock is still down 62% from where it was five years ago as the company’s profits haven’t recovered from the pandemic. The big issue is the debt the firm has on its balance sheet. 

As a result, the business is paying around £1.3bn in interest expense per year, compared to £142m in 2019. And there’s a risk it will have to issue shares to pay down its liabilities.

The good news, though, is that interest rates are starting to fall. And this should help reduce the effect of Carnival’s debt on its earnings and free cash flows. 

Right now, the company’s shares trade a price-to-earnings (P/E) multiple of around 14. Looking beyond the volatile Covid-19 years, that’s not unusually high for the stock.

If an improving balance sheet can drive higher profits in future, Carnival shares could be great value. I certainly think this one is worth a closer look for value investors.

Ibstock

At a P/E ratio of 101, FTSE 250 brick company Ibstock (LSE:IBST) doesn’t look anything like a bargain. But a closer look at the business reveals a slightly different picture.

Ibstock’s earnings per share have fallen from 22p to 2p since 2022. That’s why the P/E multiple is high despite the stock being down 20% over the last five years.

The main reason is weak construction output in the UK. The question for investors is whether this is cyclical or permanent – and I think there are reasons for thinking it’s the former.

UK house prices have been rising at their fastest rate in three years. And this can provide a big incentive for housebuilders, leading to higher demand for bricks and other materials. 

One potential risk for Ibstock is the possibility of housing construction techniques changing to be less reliant on bricks. There are some signs of this happening elsewhere, notably in Europe. 

Overall, though, the company looks set to benefit from a recovery in construction, but the share price arguably doesn’t reflect this. That’s why I think it’s one for value investors to consider.

Value opportunities

A lot of the time, stocks are cheap for a reason – it’s because there are permanent problems with the underlying businesses. That’s one of the risks with value investing. 

With Carnival and Ibstock, though, I don’t think this is the case. Both have been facing challenges recently, but I believe there’s a decent chance these are temporary in nature. 

Exactly when things will start to pick up is difficult to predict. But if they do, then the current prices could be good opportunities for investors looking for long-term returns.