The FTSE 100 and FTSE 250 indices have experienced lift-off in recent weeks. But despite significant share price gains, many top UK shares still look dirt cheap at current levels.
Here are four top bargains for savvy investors to consider.
GSK
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Concerns over its drugs pipeline leave GSK (LSE:GSK) shares trading at a discount to the broader pharma sector. For 2024, the Footsie firm deals on a price-to-earnings (P/E) ratio of just 11.4 times.
While recent signs here have been more encouraging — in the first quarter, it had 89 products in development, and four positive phase III test results — any setbacks at the lab or with regulators could damage its share price again.
I’d be prepared to give GSK the benefit of the doubt however. Not only do I feel any dangers are baked into the company’s rock-bottom valuation, it’s also important to remember GSK has a brilliant record of getting its product to market. This explains its mighty £75bn market-cap.
Babcock International Group
Defence business Babcock International (LSE:BAB) also looks like a brilliant bargain at current prices.
The FTSE 250 company — which provides engineering and training services to armed forces across the globe — trades on a forward-looking P/E ratio of 13.9 times. By comparison, UK-listed peers BAE Systems and Chemring carry much heavier multiples of 19.9 times and 19.2 times respectively.
Investing in defence shares can be an excellent long-term play. This is because weapons demand remains broadly stable at all points of the economic cycle.
Buying Babcock shares could be an especially good idea today though, as spending soars across the defence sector. That’s even though project delivery problems are a constant danger than could affect future revenues.
Centamin
A rising gold price has lifted miner Centamin‘s (LSE:CEY) share price through the roof more recently. But a forward P/E ratio of 9.3 times suggests that the company remains a brilliant bargain.
Digging for metals can be unexpectedly expensive. Problems can be commonplace that crush profits and push share prices lower.
But Egypt-focused Centamin has an excellent history on this front. It has produced 5m ounces of yellow metal from its flagship Sukari mine since 2009. The complex has almost 6m ounces of further reserves too, suggesting it could remain a lucrative money spinner for some time to come.
Aviva
Like those other shares I describe, Aviva (LSE:AV.) trades on an attractive P/E ratio. For 2024, this sits at a modest 11.4 times.
On top of this, the life insurer also trades on a corresponding price-to-earnings growth (PEG) ratio of 0.4. Any reading below 1 indicates that a stock is undervalued. Finally, Aviva shares carry a market-beating 7.1% dividend yield for this year.
This FTSE 100 share has an excellent chance to capitalise on the UK’s rapidly-growing elderly population. This demographic change is set to drive demand for retirement, wealth and insurance products much higher from current levels.
Aviva faces significant competition to grow profits. But the insurer’s long history (it’s been selling products since 1696) suggests it has what it takes to seize this opportunity.
