Cheap FTSE 100 shares are increasingly difficult to come by as the stock markets keep inching up. I know this may come as a surprise, but I think there are still some stocks available at low prices compared to their performance. Here are three that I like.
High performing and dirt cheap
One of them is Pershing Square Holdings, a fund with holdings in hospitality and real estate. With the pandemic hopefully under control now and the economy expected to grow fast, these sectors should benefit. This is especially true for the US, where many of the companies it has invested in are located.
The company’s share price is up 37% over the past year. Its recent results have been strong too. Yet, the company’s price-to-earnings (P/E) ratio is at a minuscule two times, which makes it dirt cheap. There is always a possibility that its future performance may not be quite like its past performance, if market conditions change or economic recovery slows down. But for now, it is a buy for me.
Continued robust performance
Another investment company I like is the FTSE 100 private equity firm 3i. It too has a low P/E ratio of seven times. This may not be quite as low as that for Pershing Square but it is not quite as high as the average FTSE 100 P/E of around 15 times. And this is despite the 43% increase in its share price in the past year.
The company performed well in both 2020 and reported good quarterly results more recently too. I also like that it pays a non-trivial dividend, with a current yield of 2.9%. I reckon that if it continues to perform, it can rise further. That said, last year was particularly good for 3i, which may or may not continue in the future. This is especially so given the concentration of its investments.
FTSE 100 e-commerce winner
Another dirt cheap FTSE 100 stock is the warehousing real estate investment trust Segro, which has a P/E of 6 times. The company has had a particularly good past year. Demand for warehousing rose in line with increased shopping from e-tailers, while brick-and-mortar retailing was severely restricted.
It is possible that this year may see some slowing down in growth, now that the lockdowns have lifted. But so far it appears that online shopping is still strong. This in turn says to me that its share price can continue to rise. Even if it does soften in the short term, I reckon over time it will be a rewarding stock to hold given that online sales will only strengthen.
It has also shown a strong performance over the past decade, which is encouraging. If I had bought it 10 years ago, I would have made capital gains of over 400% by now.
