2 bargain-basement FTSE 100 shares investors should consider buying

Jon Smith talks through two of his favourite FTSE 100 shares that have suffered recent falls but still offer good value.

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The January retail sales might still be a long way off, but that doesn’t mean I can’t find bargains already with FTSE 100 shares. Some companies have endured a tough 2023 and the share price reflects that. Yet when it comes to long-term value, I think it could be time to buy the dip on some examples.

Slimming down to beef up

First up is Vodafone (LSE:VOD). The global telecommunications giant saw the stock drop by 25% over the past year. It hit lows not seen in a decade back in the summer.

The business has struggled over the past few years as it’s sprawling operations around the world have suffered from inefficiency and a lack of growth.

A new CEO was appointed in January demanding swift changes designed to transform the business. Della Valle has already announced 11,000 job cuts over the next three years. She is also looking to sell off certain assets, including its Spanish arm to be sold for £4.4bn.

So I thinknow is a good time to consider investing. The stock has taken a hit, but the actions being taken will make the business better in the long run. It’s currently cheap, with a price-to-earnings ratio of 7.74, below the benchmark figure of 10 that indicates fair value.

The main risk is that the changes are too little, too late. However, given the pace with which transformation is taking place, I remain optimistic.

Keeping expectations in check

The other stock I feel investors should consider is NatWest Group (LSE:NWG). I recently wrote about the stock from an income perspective. The dividend yield forecast for 2025 was above 8% at that time. Yet with the 19% fall in the share price over just the past month, this now could be even higher.

The reason for the recent drop (causing the stock to have dipped 23% over the past year), was due to the Q3 results. Even though I don’t feel the results were that bad, they did fall short of expectations. This can happen when people are overoptimistic about potential earnings and set the bar too high.

For example, operating profit before tax was £1.33bn. Although this was up on the same quarter last year of £1.09bn, it fell short of the expected £1.4bn.

The Nigel Farage account closure news also hurt brand reputation. I don’t feel this story is over yet and this is a risk for the company going forward.

Ultimately, the fall means the price-to-earnings ratio is 4.98. This stock hit 52-week lows earlier this week. I think this makes the stock cheap and I believe the share price will recover. The bank is performing very well and I just think some investors are expecting growth at a pace that isn’t realistic. Once things have settled down, I’d expect it to move higher.

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.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Vodafone Group Public. 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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