It’s been a turbulent week for FTSE 100 shares as military action in Ukraine shakes market confidence. Britain’s flagship share index posted its biggest one-day fall since the middle of the Covid-19 crisis on Thursday. More market volatility could be around the corner too as the geopolitical fallout of the conflict spreads and concerns about inflation grow.
That said, there are plenty of FTSE 100 shares out there that I consider to be too cheap to miss after last week’s mini stock market crash. That’s even after share prices rallied at the end of the week.
These FTSE 100 shares both look brilliantly cheap on paper. Here’s why I’d buy them for my stocks portfolio today.
10.3% dividend yields
I think Persimmon (LSE: PSN) offers the sort of all-round value that’s hard to ignore. Concerns that housebuilders might have to pay massive compensation for the cladding crisis have hit investor appetite for these businesses of late. So has the prospect of slowing homes demand as interest rates rise.
This all means that Persimmon’s share price just touched its cheapest since mid-2020. It’s also down 11% over the past 12 months. Still, as a lover of value shares, I think the company’s worth a close look at current prices. Not only does it trade on a dirt-cheap price-to-earnings ratio of nine times, its dividend yield sits at a monster 10.3% too.
I’d buy the housebuilder because I think interest rates will remain well below their historical average, meaning that homebuyer interest should remain strong. I also believe that Persimmon’s own building product manufacturing operations leaves it better protected than its rivals to shelter the problem of rising costs. I therefore expect profits here to continue rising strongly.
Another FTSE 100 bargain to buy
Now B&M European Value Retail’s (LSE: BME) shares don’t trade as cheaply as Persimmon’s. But I think its P/E ratio of around 14 times for the next two financial years still offers decent value when one considers the prospect of solid upgrades to earnings forecasts over the next couple of years.
The value end of the retail industry has been growing strongly for more than a decade now. It was tipped for further solid expansion even before inflationary pressures put British consumer spending power under the cosh. A survey by Kantar Public last week showed that 52% of households are finding it harder to pay their bills. This is up sharply from the 44% reported in January. I don’t think it’s a coincidence that data like this comes around the same time that B&M is reporting better-than-expected sales.
As a long-term investor I’m concerned about B&M’s lack of an online shopping channel. This could see it lose out to the competition as the popularity of e-commerce grows. Still, it’s my opinion that B&M’s robust position in the fast-growing value retail segment — helped by its ongoing store expansion programme — makes the FTSE 100 firm a great buy for my portfolio today.
