The FTSE 100 is packed with brilliant shares that are trading below what they’re truly worth. I’ll be looking to add the following value stocks to my portfolio when I have spare cash to invest.
JD Sports Fashion
Athleisure has been one of the fastest-growing fashion segments of recent years. And according to market experts, consumer demand will continue surging. Analysts at Grand View Research, for instance, think the market will grow at an annualised rate of 9.1% between now and 2030.
Retailer JD Sports Fashion (LSE:JD) is one UK share that is booming on the back of this fashion trend. The company expects pre-tax profits to break through the £1bn barrier this year. Organic revenues were up 15% at constant currencies in the 13 weeks to early May.
The FTSE 100 firm is expanding rapidly to allow it to enjoy strong and sustained sales growth, too. It is looking to add 1,750 new stores to its 3,390-strong global estate over the next five years. This month the athleisure specialist also announced plans to acquire French sports fashion retailer Courir.
Tough economic conditions pose a threat to retailers like this. But I think this is reflected in the firm’s ultra-low valuation.
Today the company trades on a sub-1 forward price-to-earnings growth (PEG) ratio of 0.8. This (at least in my opinion) makes its shares too cheap to ignore.
Glencore
Commodities businesses like Glencore (LSE:GLEN) also face enormous pressures in the near term. As the global economy cools, this FTSE share — which produces and markets metals and energy products — could see demand for its products and services drop.
Fresh economic data from China has exacerbated the sense of gloom surrounding mining companies. Industrial production in April rose just 5.6%, less than half what analysts had been expecting.
But as a long-term investor I’d be prepared to accept some near-term turbulence. This is because undersupply in many raw material markets is tipped to worsen considerably. In this scenario, prices across the commodities suite could shoot through the roof.
Take copper, for example, a major earnings driver for Glencore. Consumption is set to soar as the green energy revolution continues and spending on electric vehicles and renewable energy projects rises.
At the same time, global red metal production is on course to decline on falling output from existing mines and a weak pipeline of new projects. It’s why research firm Wood Mackenzie expects a huge 9.7m copper market deficit in the next decade.
Glencore is well placed to exploit this favourable market outlook, too. It has enormous financial headroom that should allow it to grow earnings through organic investment and acquisition activity. Net debt toppled to just £75m as of the end of 2022.
It’s my belief that the miner’s low valuation reflects the huge returns it could deliver over the long term. The firm currently trades on a forward price-to-earnings (P/E) ratio of 6.9 times. I think that this — along with its mighty 10.8% dividend yield — makes Glencore one of the FTSE’s hottest value stocks.
