2 dirt cheap FTSE 100 shares! Which should I buy in July?

These FTSE 100 shares trade on rock-bottom earnings multiples and offer high dividend yields. Are they top buys or potential traps?

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The FTSE 100’s risen by around 6% so far this year. This is thanks in large part to improving buying interest from value investors.

Even including those recent gains, the Footsie has lagged other major global share indices for several years now. It means that many top UK blue-chip shares can still be picked up at rock-bottom prices.

However, some large-cap companies are cheap for good reason. And investors need to be careful to avoid these like the plague.

Take the following FTSE 100 stocks, for instance. Are they brilliant bargains or could they turn out to be investor traps?

Barclays

Right now, Barclays (LSE:BARC) shares offer excellent all-round value, at least on paper. The high street bank trades on a forward price-to-earnings (P/E) ratio of 6.7 times. Meanwhile, its dividend yield for this year sits at an attractive 4.1%.

Barclays’ US operations could provide it with excellent opportunities to grow earnings. It also has a substantial investment bank.

However, the business is also dependent on a strong UK economy to drive the bottom line. In 2023, its domestic banking and credit card operations made up almost 40% of group profits. This is a concern to me given the huge structural problems that are strangling British GDP growth.

So I still have huge reservations about buying its shares. But this is not my only worry.

I’m also put off by the rising competitive pressures it’s facing across the world. Challenger bank Revolut announced on Tuesday (2 July) that the number of retail customers on its books soared 45% in 2023, to 38m.

Its capacity to steal customers from established banks like Barclays will grow too if — as expected — Revolut secures a UK banking licence in the near future. With a spate of IPOs being lined up by fintech businesses, the banking landscape could be about to change significantly.

WPP



Of course, no share investment is completely without risk. But in the case of WPP (LSE:WPP), I believe the potential rewards on offer outweigh the dangers it poses to investors.

The advertising agency has had its fair share of troubles more recently. Weak spending from the US tech sector — combined with the impact of China’s slowdown — remains a threat.

So do fundamental changes in the way companies choose to advertise their goods and services. More and more firms are bringing their marketing activities in-house. Some public relations specialists are also pulling their tanks onto WPP’s lawn by offering advertising services.

Yet I still believe WPP has considerable investment potential. Operating in more than 100 countries, it has significant scope to harness rapid economic growth in emerging markets. Rising investment in digital advertising and e-commerce also sets it up nicely for the digital revolution.

Finally, WPP has expertise in multiple areas including advertising, public relations and brand consulting. This makes it a trusted and evergreen supplier for end-to-end services with some of the world’s biggest companies.

Like Barclays, WPP shares offer solid value, on paper. They trade on a forward P/E ratio of 8 times and carry a 5.3% dividend yield. It’s a share I’ll consider buying if I have spare cash to invest this July.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays 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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