Got £2,000 to invest? I’d consider these 2 overlooked FTSE 100 bargains

Harvey Jones picks out two FTSE 100 (INDEXFTSE:UKX) stocks that he thinks the market has unfairly overlooked.

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The FTSE 100 made a strong start to the year but that has now faded and almost every stock I’ve reviewed lately seems to be on the slide.

That might put some people off but it’s at times like these that you can really pick up some bargains. Investors may be shunning the following two stocks right now, but they still offer plenty of dividend and share price growth potential.

Kingfisher

These are tough times for consumer-facing businesses such as DIY chain operator Kingfisher (LSE: KGF), and you can see that in its share price, which has almost halved in the last three years. The group has been knocked by the UK housing market, as dwindling transaction levels dampen sales at B&Q and Screwfix.

At least UK sales are growing while they have been falling at its French chains Castorama and Brico Depot. Kingfisher has Eastern European operations as well, where Romania has been racing ahead, with Poland growing at a steady lick too.

The falling Kingfisher share price threatens to drive it out of the FTSE 100 as its market cap flutters around the £4bn mark, and incoming boss Thierry Garnier has a big job on his hands when he pitches up next month. Trading at 9.1 times forecast earnings and yielding a forecast 5.6% covered exactly twice, the stock does look tempting though. Especially with City analysts predicting earnings per share will rise 9% this year and 11% next.

If we get a positive Brexit outcome, a snap back in the UK economy could see Kingfisher take wing, and investors who buy now could reap the rewards. The group is debt-free, which adds a layer of security, and could prove a better buy than the market thinks.

Prudential

If you’re hungry for bargain stocks, I’d recommend looking beyond the embattled retail sector and focusing on areas with greater growth potential. Asia-focused insurance giant Prudential (LSE: PRU) is one stock worth checking out.

Its growth strategy is to sell pension and protection projects to the emerging Asian middle class, and the region continues to drive growth to this day.

Prudential’s most recent half-yearly results showed group operating profit from continuing operations jumping 14% to more than £2bn, with Asia delivering double-digit growth across a range of key metrics. Its overlooked US division has also been growing strongly.

The M&G fund management arm demerger, to be completed in Q4, could help drive value in both businesses and lift the Prudential share price even higher. There is an opportunity here as the stock is down 20% in the last month, as falling interest rates, the US-China trade war and Hong Kong political unrest cloud investors sentiment.

However, earnings growth has been steady for years, and analysts continue to predict 7% and 11% growth over the next couple of years. Prudential trades at a bargain valuation of just 8.4 times forward earnings, while the forecast yield of 3.9% is generously covered 3.2 times, and management has shown plenty of progression in the past. I’d take advantage of the current slump to buy Prudential today, with the aim of holding it for the long term.

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.

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