If you’re looking for investment opportunities right now, you have no shortage of options. Year to date, the FTSE 100 index is down roughly 23%, which means there’s plenty of value around.
Of course, stocks could potentially fall further in the short term. We don’t know what’s going to happen to the stock market tomorrow, next week, or next month. However, in the long run, share prices should rebound. With that in mind, here’s a look at two FTSE 100 stocks that I believe are cheap right now.
Britain’s Warren Buffett is buying here
One FTSE 100 stock that I believe offers value right now is Hargreaves Lansdown (LSE: HL). This time last year, it was trading near 2,400p. However, today, it can be bought for around 1,450p. The current share price equates to a trailing P/E ratio of about 26 using rolling 12-month earnings – far lower than the valuation 12 months ago.
Now, revenues and profits at Hargreaves are likely to take a hit in the short term as a result of the recent stock market crash. This is because the group’s fees are linked to assets under administration.
Yet here’s the thing. In the long run, stock markets tend to rise. So, looking beyond the near-term uncertainty, I think there’s a good chance that profits will resume their upward trajectory.
I’ll point out that portfolio manager Nick Train (aka ‘Britain’s Warren Buffett’) has been loading up on HL shares recently. Given Train’s reputation as a top stock picker, I think investors should take note.
All things considered, I see Hargreaves Lansdown as a stock that has significant potential. When investor sentiment improves, I expect the shares to rebound.
This FTSE 100 stock looks really cheap
Another FTSE 100 stock that I think looks interesting from a value perspective is advertising giant WPP (LSE: WPP). Since mid-February, its share price has fallen by about 40%. Currently, the stock is trading on a trailing P/E ratio of about 7.7.
WPP will also be impacted by Covid-19 in the short term. This is because businesses generally reduce their advertising budgets in an economic downturn. However, in my view, the FTSE 100 company won’t be impacted by the coronavirus as badly as some other companies such as those in the travel sector.
Indeed, WPP said recently that close to 95% of its 107,000 employees are working from home and providing uninterrupted service to clients. It also said that while some sectors such as Travel & Leisure and Luxury & Premium had seen advertising cuts, spending was holding up relatively well in sectors such as Consumer Packaged Goods, Technology, and Healthcare & Pharma, which together represent 54% of the group’s revenues. Encouragingly, the group also advised that it won $1bn of new business in the first quarter.
It’s worth noting that WPP has a strong balance sheet and good liquidity. At 31 March, the group had cash of £1.7bn and total liquidity, including undrawn credit facilities, of £4.4bn. Net debt was £2.8bn, down from £4.6bn a year earlier.
This all leads me to believe that the FTSE 100 stock could potentially rebound in the future. I think WPP is a classic value play right now.
