My 2 favourite FTSE 100 bargain stocks this August!

Looking for the best, cheap FTSE 100 stocks to consider buying? Here are two that brokers expect to soar in value over the next 12 months.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young Asian man drinking coffee at home and looking at his phone

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Demand for FTSE 100 stocks continues to heat up this summer. The UK’s premier share index hit new all-time peaks above 8,300 points this week, taking total gains in 2024 to 8%.

But investor appetite hasn’t been spread equally across the Footsie. Indeed, there are plenty of blue-chip shares that remain incredibly cheap following years of underperformance.

Here are two of my favourites right now. As I’ll explain, City analysts expect their share prices to rocket in the next 12 months.

Should you invest £1,000 in Aviva right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva made the list?

See the 6 stocks

Aviva

Created with Highcharts 11.4.3Aviva Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

At 496p per share, Aviva (LSE:AV.) offers brilliant value in terms of predicted earnings and expected dividends.

Okay, its forward price-to-earnings (P/E) multiple sits close to the FTSE 100 average, at 10.7 times. However, its price-to-earnings growth (PEG) ratio stands at a rock-bottom 0.5. A reminder that any reading below 1 indicates that a share’s undervalued relative to predicted profits.

On top of this, the forward yield on Aviva shares is 7.1%. This is more than double the Footsie average of 3.5%.

So what are the drawbacks of investing today? One is the possibility that interest rates will remain around current highs, thus denting consumer spending. So is the threat posed by high competition across its markets.

Yet Aviva also has an opportunity to grow earnings significantly. It has one of the strongest brands in the financial services industry. It can use this — along with its cash-rich balance sheet — to capitalise on rapid growth in the pensions and retirement products segments.

In the meantime, 15 City brokers have slapped a 12-month target of 528.4p on Aviva shares. This represents potential price upside of 7%.

Vodafone Group

Created with Highcharts 11.4.3Vodafone Group Public PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Investing in any telecoms stock can be risky due to the huge amounts they spend in infrastructure. Vodafone Group‘s (LSE:VOD) even had to cut the dividend for this year as it ramps up 5G-related spending.

But over the long term, companies like this also have significant long-term potential for investors. Demand for their services could grow significantly as our lives become increasingly digitalised.

It can be argued that Vodafone has particularly great growth opportunities too. This is thanks to its large exposure to Africa, where surging wealth levels and population sizes are driving product sales through the roof.

Vodafone — which has 157m customers across six African countries — reported organic service revenue growth of 9.2% last year.

At a current price of 73.5p, I think the potential rewards of owning Vodafone shares outweigh the risks. Its forward P/E ratio — like Aviva’s — is in line with that of the broader FTSE. Last year’s losses mean it doesn’t have a valid PEG ratio either.

But its dividend yield stands at an index-smashing 6.9%, even taking into account that upcoming dividend cut.

Vodafone's P/B ratio.
Created with TradingView

What’s more, its price-to-book (P/B) ratio sits below 0.4, as shown above. A reading below 1 suggests that a company trades at a discount to the value of its assets.

Fourteen analysts currently have ratings on Vodafone shares, creating a consensus target price of 96.2p. This implies the telecoms giant could rise 31% in value over the next 12 months.

Like Aviva, I think it could be one of the Footsie’s best bargain stocks to consider today.

Should you buy Aviva shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

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 positions in Aviva Plc. 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.

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »