11 Best Undervalued UK Stocks to Buy Right Now

5. Burford Capital Limited (NYSE:BUR)

Forward P/E Ratio: 8.98

Number of Hedge Fund Holders: 30

Burford Capital Limited (NYSE:BUR) is another financial services company based in the United Kingdom. It specializes in legal financial services such as core legal finance, complex strategies, post-settlement finance, asset recovery, and legal risk management.

Greenhaven Road Capital in its Q4 2024 investor letter noted the company to be a leader in litigation finance with a minimalistic losing rate on its cases. As per the company’s full-year report for 2024, Burford Capital Limited (NYSE:BUR) has grown its portfolio at a CAGR of 15% over the past 5 years. Management noted that the company is moving away from legacy portfolio labels to a more streamlined reporting structure focusing on return on invested capital and internal rate of return. As per Greenhaven Road Capital, the company has maintained a healthy historical IRR of 27%.

Last year, Burford Capital Limited (NYSE:BUR) established a new record for cash receipts and generated $556 million. This helped net realized gains grow by 75% year-over-year to reach $327 million for 2024. This is more than double the average annual gains over the past four years. The company ranks as one of the best undervalued UK stocks to buy right now.

Greenhaven Road Capital stated the following regarding Burford Capital Limited (NYSE:BUR) in its Q4 2024 investor letter:

“Burford Capital Limited (NYSE:BUR) – Burford isn’t just “getting there” – they’re already the leader in litigation finance with a 27% historical gross IRR and losses on only 13% of cases, according to their disclosures. I have gone out of my way in past letters to highlight just how good the company has been historically at financing litigation. They rarely lose money on cases, in part because the vast majority (76%) settle. They do, however, occasionally have “monster winners” that return 10X, 50X or even 100X their initial investment.

Burford’s leadership team personally owns stock totaling 9% (>$200M) of the company and has been a net buyer of the shares. With aligned insider ownership, historically low loss rates, and tangible book value making up more than 80% of their share price, Burford is a well-capitalized and sustainable business.

In 2024, Burford was worse than “dead money” as it posted a share price decline. It is rarely easy to isolate the cause of a share price decline, but apparently investors had some consternation over the slowing pace of investments in new cases. While I have tried to focus our attention on Burford’s current and future business, I think it is time to look deeper at the YPF case…” (Click here to read the full text)