As a retail investor, I’m always on the search for the next value stocks to add to my portfolio.
My investment strategy is simple. I plan to continue buying undervalued shares today and hold them for decades. By doing this, I’m setting myself up for a more comfortable retirement. If they have a juicy dividend yield, that’s a bonus.
These two FTSE 100 shares look like bargains not to be missed. But is that the case?
JD
It’s not been the strongest of years so far for JD Sports Fashion (LSE: JD). In 2024, its shares price is down 30%. In the last 12 months, the retail giant’s stock has lost 37.6% of its value.
That’s largely due to a profit warning the business issued back in January that stated it now expects to make around £935m in annual profits, 10% below its original guidance.
JD certainly faces an uphill battle going forward when it comes to turning around its fortunes. Inflation has eaten away at its margins. As the cost-of-living crisis continues, it’s likely that consumer spending will remain subdued for the time being.
However, is that really an issue? The stock now looks very cheap, trading on around just nine times earnings. Despite short-term problems, the business is also in good shape to perform well in the years to come.
It remains the dominant leader in the market. What’s more, it has plans to open new stores going forward, as well as continue investing in its supply chains. Albeit small, there’s also a 0.9% dividend yield to consider.
BP
Another stock I’m eyeing is BP (LSE: BP). I opened a position in the oil giant earlier this month. I’m up 3.8% — but a quick spike doesn’t get me too excited. I plan to hold my shares for the long run.
Like JD, BP shares look cheap. Right now, they’re trading on 6.9 times earnings.
They also provide a meaty yield of 4.8%. Alongside that, BP will return $1.75bn to shareholders in the first quarter of this year through share buybacks. By the end of 2025, it plans to buy back a total of $14bn worth of shares.
The largest threat to the business is the transition to renewable energy. There has been a push in recent times from governments to move away from fossil fuels. In the years to come, there’s no doubt BP will face even more scrutiny.
However, I think it’ll be some time before we completely wean off fossil fuels. And BP is a frontrunner when it comes to the green transition. It has invested heavily in areas such as biofuels. Its recent purchase of Europe’s largest solar developer further highlights its ambition to achieve its wider goal of cutting oil and gas output by 25% by 2030.
Unmissable?
So, are these shares the unmissable bargain they make out to be? Well, that’ll vary from investor to investor.
But both look cheap to me, trading below the FTSE 100 average. And I see them as having the potential to provide some healthy returns in the long run at their current prices.
With any spare cash I have in the weeks ahead, I’ll be looking to add to my BP holdings. I’m also keen to open a position in JD.
