Demand for FTSE 100 stocks continues to heat up this summer. The UK’s premier share index hit new all-time peaks above 8,300 points this week, taking total gains in 2024 to 8%.
But investor appetite hasn’t been spread equally across the Footsie. Indeed, there are plenty of blue-chip shares that remain incredibly cheap following years of underperformance.
Here are two of my favourites right now. As I’ll explain, City analysts expect their share prices to rocket in the next 12 months.
Aviva
At 496p per share, Aviva (LSE:AV.) offers brilliant value in terms of predicted earnings and expected dividends.
Okay, its forward price-to-earnings (P/E) multiple sits close to the FTSE 100 average, at 10.7 times. However, its price-to-earnings growth (PEG) ratio stands at a rock-bottom 0.5. A reminder that any reading below 1 indicates that a share’s undervalued relative to predicted profits.
On top of this, the forward yield on Aviva shares is 7.1%. This is more than double the Footsie average of 3.5%.
So what are the drawbacks of investing today? One is the possibility that interest rates will remain around current highs, thus denting consumer spending. So is the threat posed by high competition across its markets.
Yet Aviva also has an opportunity to grow earnings significantly. It has one of the strongest brands in the financial services industry. It can use this — along with its cash-rich balance sheet — to capitalise on rapid growth in the pensions and retirement products segments.
In the meantime, 15 City brokers have slapped a 12-month target of 528.4p on Aviva shares. This represents potential price upside of 7%.
Vodafone Group
Investing in any telecoms stock can be risky due to the huge amounts they spend in infrastructure. Vodafone Group‘s (LSE:VOD) even had to cut the dividend for this year as it ramps up 5G-related spending.
But over the long term, companies like this also have significant long-term potential for investors. Demand for their services could grow significantly as our lives become increasingly digitalised.
It can be argued that Vodafone has particularly great growth opportunities too. This is thanks to its large exposure to Africa, where surging wealth levels and population sizes are driving product sales through the roof.
Vodafone — which has 157m customers across six African countries — reported organic service revenue growth of 9.2% last year.
At a current price of 73.5p, I think the potential rewards of owning Vodafone shares outweigh the risks. Its forward P/E ratio — like Aviva’s — is in line with that of the broader FTSE. Last year’s losses mean it doesn’t have a valid PEG ratio either.
But its dividend yield stands at an index-smashing 6.9%, even taking into account that upcoming dividend cut.
Created with TradingView
What’s more, its price-to-book (P/B) ratio sits below 0.4, as shown above. A reading below 1 suggests that a company trades at a discount to the value of its assets.
Fourteen analysts currently have ratings on Vodafone shares, creating a consensus target price of 96.2p. This implies the telecoms giant could rise 31% in value over the next 12 months.
Like Aviva, I think it could be one of the Footsie’s best bargain stocks to consider today.
The post My 2 favourite FTSE 100 bargain stocks this August! appeared first on The Motley Fool UK.
5 stocks for trying to build wealth after 50
Inflation recently hit 40-year highs… the ‘cost of living crisis’ rumbles on… the prospect of a new Cold War with Russia and China looms large, while the global economy could be teetering on the brink of recession.
Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.
Claim your free copy now
More reading
2 grade A FTSE 100 stocks I reckon are screaming buys
Here’s where I think the Aviva share price might end 2024
£10,000 in savings stashed away? 3 steps I’d take to target a £720 dividend income
As the Vodafone share price holds firm on Q1 earnings, I’m tempted to buy
If I put £20k into a FTSE 100 tracker fund, I’d get this as a second income
Royston Wild has positions in Aviva Plc. The Motley Fool UK has recommended Vodafone Group Public. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
