There’s only a small handful of FTSE 100 shares trading for less than 200p at the moment. And they nearly all look like buys to me.
Today, I want to examine three that had passed mostly under my radar.
Cheap airlines?
Shares in International Consolidated Airlines Group (LSE: IAG) are down 75% in the past five years.
I mostly ignore airlines. I don’t like the intense competition or their exposure to external costs, which I see as the biggest risks.
But looking at the stock valuation, I wonder if I’m missing a really good buy now.
Forecasts put IAG shares on a price-to-earnings (P/E) ratio of about 5.2, dropping to almost bang on five by 2025.
The company posted a tiny profit in 2022, after a couple of years of losses. But that could ramp up to something pretty decent this year, if the analysts are right.
They even see dividends coming back. The yield would only reach a bit over 2% by 2025. But considering the state of the industry in the pandemic, I think that would be excellent progress.
High street
JD Sports Fashion (LSE: JD.) seems cheap too. Its shares have been erratic, but are up 40% in five years.
They’re in a dip in 2023, though, as inflation has been hitting consumer spending. And that might make it a good time to buy, while they’re down a bit.
The company has been expanding overseas, with recent deals in the Middle East. Expansion brings risk, for sure, especially in tough economic times.
But that could also be a good time to grow, to establish overseas assets when costs are lower.
With the retail sector, I usually want a decent dividend, as it can show the cash flow is there. We don’t have that with JD, with yields less than 1%. So that might hint at a risk too.
But there are good earnings growth forecasts, and what I see as too low a valuation. The forecast P/E drops to 8.5 by 2026.
Gas profits
Third up is Centrica (LSE: CNA). Soaring energy prices have helped boost the Centrica share price, and it’s climbed since early 2020.
Judging by that, it might not look like a buy. But there’s been a longer-term dip, and the price is still pretty much where it was back in September 2018.
And if we go back 10 years, we see a fall of close to 60%. And that, I think, shows how past share prices are not a good guide to the future.
The markets expect Centrica to fall back when energy prices soften. At least, that’s what the current valuation makes me think.
Earnings do appear set to drop. But forecasts still show modest P/Es of under 10. And dividend yields should stay around 3%.
I think there could be a lot of short-term volatility here. And I wouldn’t buy right now. But I do think any short-term dips could make it a long-term buy.
