I love buying cheap shares and there are some incredible FTSE 100 bargains out there right now. Especially these three.
Last Sunday (4 August), I noticed that the BP (LSE: BP) share price was at a 52-week low and I said it looked like the “bargain of the year!”
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Great value?
The oil giant’s shares have fallen another 2.48% since then. They’re down 10.57% over 12 months and trade at just 6.26 times earnings. Better still, they yield 5.18%.
Its profits and share price rocketed during the energy crisis. Yet as the oil price retreated they halved in FY23, from $27.2bn to $13.8bn.
BP continued to reward long-term shareholders, hiking the dividend 10% and buying back $7.9bn of shares. At £20.9bn, its net debt is at a 10-year low.
With Brent crude now below $80 a barrel, investors still don’t want to know. Others are wary as BP doubles down on fossil fuels, despite the net zero push. Energy stocks are cyclical and I think the time to buy BP is when it’s down rather than up. Global warming poses risks but I’ll buy it when I have the cash.
Talking about climate change, in July I flagged up Lloyds of London insurer Beazley (LSE: BEZ). As a speciality-risk insurance and reinsurance business it’ll pick up the tab from tomorrow’s floods, storms and hurricanes.
That partly explains why the share price is so cheap, trading at just 4.47 times trailing earnings. That’s despite its shares jumping 35.27% over 12 months, boosted by a 155% increase in 2023 pre-tax profits to a record $1.25bn.
Its good form continues as half-year results published on 8 August showed a record profit before tax of $728.9m, nearly double last year’s $366.4m. Beazley was last week’s best FTSE 100 performer up 12.53%.
NatWest Group is back
Its 1.96% yield is at the lower end, but that’s partly down to the booming share price. Another one to buy when I have the cash.
NatWest Group (LSE: NWG) is also on a roll. Its shares are the second-best-performing on the FTSE 100 over the last six months, up 58.4%. Only Darktrace has risen faster, up 68.2%. Over 12 months, NatWest is up 38.85%.
The big banks are finally living up to their potential, and the NatWest share price is leading the charge. Yet it’s still astonishingly cheap, trading at 6.67 times earnings. The yield is also attractive at 5.11%.
Labour’s decision to abandon plans to sell the government’s remaining NatWest stake has lifted the stock, as there will be no cut price shares flooding the market.
Analysts at Berenberg have lifted their target price to 415p. Today, NatWest shares trade at 334p, so there’s a potential 25% uplift there.
It’s not all happy days though. First-half profits fell 15.6% to £3.03bn while net interest margins dropped 16 basis points to 2.07%. Margins may be squeezed further when interest rates are cut. Despite that, I’d still buy NatWest at today’s low valuation, if I hadn’t already gone big on the banking sector via Lloyds Banking Group.
