Are these the FTSE 100’s best bargains?

Royston Wild reveals a cluster of FTSE 100 (INDEXFTSE: UKX) giants offering plenty of upside at current prices.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I’m looking at four FTSE 100 (INDEXFTSE: UKX) stars offering irresistible value.

Package up a bargain

With the online shopping phenomenon still picking up pace, I reckon Royal Mail (LSE: RMG) is in great shape to generate splendid returns in the years ahead. And investors can look forward to exploding parcel volumes both at home and abroad — the courier operates across more than three dozen countries.

The City expects earnings at Royal Mail to move 3% and 5% higher in the years to March 2017 and 2018, respectively, creating very attractive P/E ratios of 11.9 times and 11.3 times. These figures obliterate the FTSE 100 average of 15 times by some distance.

And dividend yields of 4.5% and 4.7% for these years should attract serious attention from income chasers.

Travel titan

Concerns over the impact of terrorism in key destinations has shaken the travel sector in recent weeks, a factor that has sent TUI Travel’s (LSE: TUI) share value spiralling lower.

Of course this issue merits serious attention from investors. But I reckon the impact of robust economic conditions on holidaymakers’ wallets — combined with the fruits of massive restructuring — still makes the travel operator a great stock bet.

Indeed, TUI Travel is expected to report earnings growth of 7% in the year to September 2016, creating a P/E rating of just 12.6 times. And the multiple drops to just 11 times for 2017 thanks to an anticipated 15% bottom-line bump.

Meanwhile, dividend yields of 4.8% and 5% for this year and next smash the big-cap forward average of 3.5%.

Plug in

Surging demand for BT Group’s (LSE: BT-A) broadband and television services continues to power revenues growth at the firm’s Consumer division. And I expect massive investment in its fibre network to keep driving surfer demand through the roof.

The impact of this colossal investment is expected to push earnings at BT 10% lower in the year to March 2017. Still, this leaves the telecoms titan dealing on a P/E rating of just 13.9 times. And an anticipated 8% earnings rebound in 2018 nudges the multiple to a mere 12.6 times.

On top of this, predictions of exploding profits are expected to drive the dividend from 3.8% this year to a splendid 4.3% in 2017.

Bless the gains down in Africa

I believe the exciting emerging regions of Africa make Old Mutual (LSE: OML) an exceptional stock candidate. Surging wealth levels in these regions — and particularly in South Africa — should drive financial product demand in the years ahead, with planned restructuring bolstering the insurer’s sales prospects still further.

In the meantime, the number crunchers expect earnings at Old Mutual to fall 8% in 2016 before bouncing 9% next year. Consequently the financial play deals on P/E ratings of just 10 times and 9.2 times.

And dividend yields of 4% and 4.5% for these periods seal the investment case, in my opinion.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »