2 under-the-radar FTSE 100 stocks under £2

Jon Smith identifies two FTSE 100 stocks that he believes are getting a lack of attention from some investors but that shouldn’t be counted out.

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It’s true that the FTSE 100 contains the UK’s largest listed companies. However, this doesn’t mean that all of the firms are at the top of people’s minds all the time. That’s why I’ve spotted a couple of stocks that are flying under the radar at the moment that I’m thinking about buying.

Time to phone home

Airtel Africa (LSE:AAF) is the leading provider of telecommunications and mobile money services in 14 African countries. At the moment the stock trades at 104p, with it down 4% over the past year.

I think this stock hasn’t received much attention recently because most of the sector focus has been on BT Group and the strategy changes going on there. Yet in reality, Airtel has been performing well in its own right.

The latest results show how the business is still growing. The total customer base grew by 9.1% for the nine months through to the end of 2023 versus the previous year, with a 22.4% increase in data customers. In terms of this filtering down to hard cash, revenues grew by an impressive 20.2%.

Interestingly, the devaluation of some of the emerging market currencies (e.g the Nigerian naira) meant that profit after tax was just $2m in the period, after a $330m hit from the loss of value in the naira. This is a risk going forward, as the business needs to better hedge foreign currency exposure.

Ultimately, I think this is a solid business that serves a rapidly growing market, which opens up the potential for high profits in the future.

Building back up

The second company I like is Taylor Wimpey (LSE:TW). The firm built over 10,000 homes in 2023, making it one of the largest players in the industry. The homebuilder has been caught in a tricky spot since interest rates started to be hiked a couple of years ago. Sure, the stock is up 10% over the past year. Yet over the past three years, it’s still down 30%.

The cycle of hiking interest rates historically has always been bad for the property sector. Mortgages rates are more expensive, people struggle to afford to buy a place and banks can’t be as competitive on loans. This impacts Taylor Wimpey because the average selling price of a finished home falls, earning the firm less revenue.

This is a risk going forward. I feel we’ve finished the rate hiking cycle and should be due imminent cuts here in the UK. This is due to inflation falling back to manageable levels.

Yet as we stand, I feel the stock is under the radar because some investors are ignoring the property sector still. This could be because some got burnt on it previously. It could also be because they think that it’ll take a long time to recover.

I don’t agree here, and feel Taylor Wimpey is well placed with orders to take advantage of a surge in demand that would come from lower mortgage rates. It’s a stock I’m thinking about buying at the moment to outperform over the next couple of years.

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 Airtel Africa Plc. 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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