3 FTSE 100 Stocks To Buy Today: Barclays PLC, J Sainsbury plc and HSBC Holdings plc

Roland Head unearths three FTSE 100 value plays: J Sainsbury plc (LON:SBRY), HSBC Holdings plc (LON:HSBA) and Barclays PLC (LON:BARC).

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I’ve been looking for genuine value stocks in the FTSE 100 — a more rewarding task than you might expect, after a five-year bull run.

Although the FTSE 100 as a whole has an average P/E of 17, and dividend yield of just 2.8%, not all of its member companies enjoy such rich valuation.

Indeed, I’ve screened the FTSE 100 using a set of criteria aimed at highlighting true value stocks, and have managed to find three firms that qualify under my search criteria, which highlighted shares with a P/E of 12 or lower, above average yields and low price-to-book ratios.

barclays1. Barclays

Barclays (LSE: BARC) (NYSE: BCS.US) has had a poor start to 2014. The bank’s share price has fallen by 20% from its January peak of 296p, and its shares currently trade on a price-to-tangible book ratio (P/TB) of just 0.85. This gives Barclays a theoretical liquidation value of 283p per share — 18% above its current share price of 239p.

I rate Barclays as a strong buy, and it looks cheap on other measures, too. It currently trades on a 2014 forecast P/E of just 8.4 and offers a prospective yield of 3.9%, based on analysts’ consensus forecasts.


2. J Sainsbury

J Sainsbury (LSE: SBRY) announced this week that its nine-year run of continuous sales growth ended in the final quarter of last year. Despite this, the firm’s finances are in good shape, and its 38% net gearing is significantly lower than Tesco (52%) and Wm. Morrison Supermarkets (59%).

Sainsbury’s also looks cheap on other measures: its trailing dividend yield is 5.5%, while its trailing P/E ratio is just 10. As a final sweetener, the supermarket trades on a book value of 1, which suggests that its valuation is firmly underpinned by its extensive property portfolio.


3. HSBC Holdings

HSBC Holdings (LSE: HSBA) (NYSE: HSBC.US) is one of my major personal shareholdings. Although its valuation isn’t quite as low as that of Barclays, I believe it could offer potential upside of 14% plus a 5% yield over the next twelve months.

HSBC’s 2013 earnings per share of $0.84 are expected to rise by 14% to $0.96 in 2014. If the bank maintains its undemanding current P/E of around 12, that means its share price could also rise by 14% over the next year, in addition to its prospective yield of 5.4%, giving a potential gain of almost 20%.

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.

Roland owns shares in Tesco, Wm. Morrison Supermarkets, Barclays and HSBC Holdings but not in J Sainsbury.

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