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Are these the FTSE 100’s hottest dip buys?

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While demand for Britain’s blue chips continues to head through the roof — the FTSE 100 posted a 12th consecutive record closing high on Friday — some great stocks have failed to be carried in the updraft.

Reckitt Benckiser (LSE: RB) is one such share, the household goods hulk actually limping 1% lower since the start of 2017 versus the Footsie’s 3% rise over the same period. In fact, Reckitt Benckiser currently trades at an 11% discount to the record peaks struck last July.

Yet the same phenomenon that’s helping to drive the Footsie higher, namely the positive foreign exchange headwinds created by sterling’s ongoing slump, is also a key earnings driver at Reckitt Benckiser. The company saw revenues roll 17% higher between July and September, to £2.56bn. But on a like-for-like basis, sales rose just 2%.

I reckon the market is missing a trick here, and believe investors should consider tapping into Reckitt Benckiser’s recent share price weakness.

The manufacturer’s faded lustre can be understood to some extent due to difficulties in some of its global markets. Indeed, Reckitt Benckiser has seen sales moderate in both emerging and developing regions in recent months.

Having said that, my bullish long-term take on the business remains intact, and I reckon the massive sums being ploughed into the development and marketing of its industry-leading brands like Durex condoms and Nurofen painkillers should set it on course for continued earnings growth.

The City shares my optimistic view, and Reckitt Benckiser is expected to punch earnings growth of 14% and 8% in 2017 and 2018 respectively. And I reckon subsequent P/E ratios of 20.4 times and 18.8 times are great value given the exceptional earnings visibility of its broad product ranges, not to mention its extensive global footprint.

A smoking pick

Tobacco titan Imperial Brands (LSE: IMB) shares some similar qualities to Reckitt Benckiser. Not only does the firm gain from the brilliant brand power of its products — for instance JPS, West and Gauloises — but of course the company’s presence can be found across the world.

And like the household goods maker, I reckon now is a great time to plough into Imperial Brands’ stock. The company has seen its share price clatter 13% lower from the summer’s record highs, and I reckon this is a great opportunity for dip-pickers to pile in.

The cigarette manufacturer’s low valuations certainly leave room for shares to follow an upward path again, with predicted earnings rises of 8% and 5% for the years to September 2017 and 2018 respectively producing P/E ratios of just 13.3 times and 12.6 times.

Imperial Brands is splashing the cash to keep earnings on an upward keel to keep the bottom line swelling, and just this month announced it was entering the huge Chinese market after forming a joint venture with regional powerhouse China Tobacco. The country is the world’s largest tobacco market with annual volumes of almost 2.5trn cigarettes, Imperial Brands estimates.

I reckon both Imperial Brands and Reckitt Benckiser are in great shape to provide sterling shareholder returns for many years to come.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Imperial Brands and Reckitt Benckiser. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.