Five cheap FTSE 100 stocks to watch
We looked at five FTSE 100 stocks that are currently trading at relatively low valuations.
The FTSE 100 is up 6% for the year so far. The index trades at around 12 times earnings, which remains cheap compared to its US peer, the S&P 500.
Despite these gains, there are still a number of stocks in the FTSE 100 that trade at low valuations relative to their five-year average. We looked at five stocks in the main UK index that trade at a price-earnings ratio at least 20% below their five-year average.
Informa
Publishing business Informa is up 10% so far this year. Despite this, the firm’s upcoming interim results may provoke some weakness in the share price, given that it faces tough comparisons to last year’s strong performance.
The share price currently trades at 28 times earnings, well below the five-year average of 78 times. Despite the strong gains made over the past six months, Informa could still be worth watching.
JD Sports
A profit warning in early January set the tone for the JD Sports fashion retailer, and was followed up at the end of May with more bad news. Sales growth for the past year was 9%, and with inflation growth abating, consumers may have more money to spend in the year to come.
Having fallen by a third over the year so far, the share price now trades at 10 times earnings, a drop of over 60% from the five-year average.
Whitbread
Whitbread 20% share price drop in 2024 has come even as the core hotel business reported record revenues. But a poorer performance in its pub division has put the share price firmly on the back foot.
At 18 times earnings, the shares might not trade at a bargain-basement valuation, but it is much cheaper than its five-year average of 42 times, and a 3.3% yield increases the shares’ attractiveness.
Beazley
2024 has gone very well so far for the Beazley insurance company, with the share price up by over 28%. The insurance market is holding up well, and with interest rate cuts likely this year, stocks like Beazley with its 4% yield will become more attractive for investors.
Despite that, and even at 5 times earnings, the valuation is still over a third lower than the five year average of 9.
Burberry
The troubled times continue for Burberry, which has engaged in a round of sweeping job cuts in order to reduce costs. Sales fell 4% for the year to the end of March, and it looks like demand in the key market of China will continue to weaken.
Compared to its five-year average PE of 17 times earnings, Burberry now looks cheap at 11 times earnings. While the dividend yield is a solid 7%, investors should be aware that the payout may be cut should the group’s sales outlook continue to worsen.
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