Unless I’m crazy, these FTSE 100 shares are a steal!

I bought these two FTSE 100 stocks for their market-beating dividend yields. But I also see both shares are strong candidates for big price rebounds.

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Since late June 2022, my wife and I have built a brand-new portfolio of undervalued shares. After 15 months of buying, we now own seven new US stocks, 15 FTSE 100 shares, and five FTSE 250 positions.

In total, we bought 27 new stocks. Though many of our new holdings have performed well so far, a few have lagged behind. For example, here are two very undervalued FTSE 100 shares that I still nurse high hopes for in future.

Cheap FTSE 100 share #1: Barclays

I can’t quite figure out why Barclays (LSE: BARC) shares languish at current levels. As I write, the stock trades a whisker short of 160p, valuing the Blue Eagle bank at £24.5bn.

On 8 March 2023, Barclays stock was riding high, hitting a 52-week peak of 198.86p. Then a crisis among mid-sized US banks sent financial stocks diving worldwide. Just 12 days later, the stock bottomed out at a 52-week low of 128.12p on 20 March.

Perhaps this heightened volatility is discouraging investors from buying this cheap stock? After all, Barclays shares trade on a lowly multiple of 4.6 times earnings, for a bumper earnings yield of 21.6%.

Also, Barclays shares offer a dividend yield of 4.8% a year — a fifth higher than the FTSE 100’s yearly cash yield of around 4%. So what’s not to like?

Of course, these are trailing figures — and UK households are increasingly struggling as rising interest rates, high inflation, and whopping energy bills hit disposable incomes. As a result, I fully expect Barclays’ 2023/24 earnings to get hit by rising bad debts and loan losses.

Even so, I think that most of the coming bad news is already baked into the Barclays share price. Therefore, we will hang onto this stock with a tight grip.

Footsie laggard #2: Vodafone

Vodafone Group (LSE: VOD) is a well-known telecoms group with a global presence. It is the largest operator of mobile and fixed networks in Europe. It has Europe’s biggest and fastest-growing 5G network. In total, it has 300m mobile customers, 27m fixed broadband customers, and 22m TV customers.

Yet the Vodafone share price has been in the doldrums for years. As I write, the stock stands at 81.42p, valuing this business at £22bn. This leaves the shares down 23.5% over one year and a gruesome 52.4% over five years.

To many investors, it may seem like this business is going nowhere. Also, its debt burden of €33.4bn may be of concern to others, though this has decreased by 19.7% from €41.6bn a year earlier.

Encouragingly, the stock has bounced back from its 52-week low of 69.73p, hit on 11 July. This came as some relief to us, as we bought the shares at 89.4p last December. Nevertheless, we are still sitting on a paper loss of 8.9% to date.

Primarily, we own Vodafone stock for its market-beating dividend yield of 9.6% a year. Also, I hope that new CEO Margherita Della Valle will finally turn this tanker around. If she succeeds, then the stock could soar. Were she to fail — as several of her predecessors did — then that spells more bad news for long-suffering Vodafone shareholders!

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.

Cliff D’Arcy has an economic interest in Barclays and Vodafone Group shares. The Motley Fool UK has recommended Barclays and Vodafone Group. 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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