I’m looking for the FTSE 100’s best value stocks to buy now. Have I found them?

If the UK stock market keeps on going up in 2024, we might soon run out of cheap value shares to buy and tuck away for the long term.

| 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.

Image source: Getty Images

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.

The best value stocks aren’t always the ones on the lowest valuation measures. Sometimes, share prices are at rock bottom for a reason — and they can go lower.

But some of the FTSE 100 stocks with the lowest price-to-earnings (P/E) ratios look very tempting. At the end of 2023, Barclays, NatWest Group, HSBC Holdings, BP and Lloyds Banking Group were at rock bottom.

What do things look like today?

Should you invest £1,000 in Unilever right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Unilever made the list?

See the 6 stocks

Lowest P/E stocks

StockRecent
price
P/E 2024P/E 2025P/E 2026
International Consolidated Airlines (LSE: IAG)177p4.74.34.1
HSBC Holdings694p6.77.67.1
Beazley (LSE: BEZ)674p6.75.85.3
Standard Chartered785p6.86.34.8
Barclays215p6.95.64.6
(Sources: ShareCast, Yahoo!, MarketScreener)

How about that — Barclays and HSBC are still down there. But at least their valuations are higher now. We’ve seen three of the cheapest five move out of the table altogether. And the remaining two are valued more highly.

So it turns out it would have been a good move to buy all five of December’s lowest, at least for the short time that’s passed since then.

We have a new bank in the list now, Standard Chartered. But I want to peek at the other two brand new entries.

Flying low

The International Consolidated Airlines share price has been rising since late 2022. But it’s still down 65% in the past five years. And those low P/E multiples of four to five almost cause me physical pain.

Is the stock really that cheap? Perhaps not when we account for debt. An investor buying now wouldn’t just be bagging a piece of the market-cap. They’d be taking on a slice of the debt too, and we need to factor that in.

At the last count, International Consolidated had £7.4bn in net debt. And the market-cap is £8.7bn right now. Allowing for that, I work out an adjusted P/E of 8.7 for 2024.

Is that still a buy valuation? It might be.

Cheap insurer?

The Beazley share price meanwhile, has been doing better. It’s gained strongly since the crash. And it’s up 30% so far in 2024, boosted by a strong Q1.

Unlike most insurance stocks, with their fingers in all sorts of financial pies, Beazley’s business is simpler. It’s a Lloyds of London insurer, and does speciality-risk insurance and reinsurance.

But it could be open to all sorts of global risk in the coming years. I don’t know if anyone else has noticed, but large parts of the world seem to be lurching from crisis, to catastrophe, to calamity these days.

And while Beazley might look cheap on a P/E basis, the forecast dividend is low for the sector at only 2%. There are more general insurers offering 7% and more. But again, it does tempt me.

Best value stocks?

I’d never buy a stock just because its P/E is very low. People have tried automated strategies that just buy the cheapest — and they haven’t worked too well.

But I do think a check on the FTSE 100’s lowest P/Es can help us find good value buys… especially in today’s mixed-up and uncertain stock market.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, Lloyds Banking Group Plc, and Standard Chartered Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businesswoman calculating finances in an office
Investing Articles

With Nvidia stock down 30% in the tariff panic, should we buy now?

Nvidia stock has slumped in the new trade war, though it's still up 1,300% over the past five years. What…

Read more »

British Isles on nautical map
Investing Articles

This industrial giant is the UK’s largest business, but it’s not a FTSE 100 stock!

The FTSE 100 index is an obvious place to look for Britain's biggest companies, but the most valuable UK stock…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Here’s a 5-stock FTSE 100 portfolio that could generate £800 a month in passive income

Mark Hartley calculates the potentially lucrative returns of five popular FTSE 100 dividend stocks invested in a Stocks and Shares…

Read more »

Investing Articles

Up 40% in 2025, is this 1 of the best cheap UK shares to consider buying right now?

Looking for UK shares to cash in on the gold rush could be a great idea to consider. Here's one…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Dividend Shares

Is it wrong for me to buy these FTSE 100 tobacco stocks?

These two FTSE 100 tobacco stocks have thrashed the wider UK market over one and five years. But would it…

Read more »

Investing Articles

Is this a great opportunity to lock in big dividend yields for a second income?

Dividend yields rise as share prices fall. That’s why many investors will see a bear market or correction as an…

Read more »

Investing Articles

How much could a 30-year-old ISA investor have if they invested £500 a month until 60?

Generous tax advantages mean Stocks and Shares ISA investors can boost their chances of enjoying an early retirement.

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

After collapsing 28% today, are Bunzl shares too cheap to ignore?

A poor trading statement has sent Bunzl shares to multi-year lows. Could now be a good time to consider investing…

Read more »