Value shares are typically characterised by their lower-than-average price-to-earnings (P/E) ratios, higher dividend yields, and other indicators suggesting that the stock is priced low compared to its intrinsic value or historical performance. These shares are often found in sectors like financials, utilities, energy, and consumer goods, of which there are many in the FTSE 100!
Barclays
What it does: Barclays is a global bank with a presence in over 40 countries.
By Charlie Keough. A dirt-cheap FTSE 100 stock I own and plan to buy more shares in is Barclays (LSE: BARC). Its share price has skyrocketed in the last year, but I still see value.
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It trades on just 8.6 times earnings, comfortably below the FTSE 100 average (11). What’s more, I’m excited about what the times ahead could have in store for the business.
In its 2023 full-year results, CEO CS Venkatakrishnan announced the bank’s plan to save billions over the next couple of years as it vies to address weaknesses that have held it back in past times.
Of course, that will come with challenges. Should it fail to reach its targets, that could leave shareholders disappointed. I’m also conscious of interest rate cuts impacting its net interest margins.
But looking undervalued, I’m bullish on Barclays for the long term. There’s also a 3.6% dividend yield to provide some healthy passive income.
Charlie Keough owns shares in Barclays.
Coca Cola HBC
What it does: Coca Cola HBC produces and distributes Coca-Cola products across 28 countries in Europe and parts of Africa.
By Ben McPoland. Shares of Coca-Cola HBC (LSE: CCH) are up 16.5% year to date (as I write), easily outpacing the FTSE 100’s return. And they’ve surged more than 70% since bottoming out just over two years ago.
However, I think they can continue rising. The firm is a key bottling partner for The Coca-Cola Company, giving it a very strong competitive advantage. As well as Coke, it sells timeless brands like Fanta, Sprite, and Schweppes, as well as energy drinks by Monster Beverage. Branded coffee drinks is a fast-growing area (Coca-Cola owns Costa Coffee).
Crucially, disposable incomes are rising in many of its Eastern European markets, where strong economic growth is forecast over the medium and long term. The City sees revenue growing from €10.2bn last year to around €11.7bn by 2026.
Meanwhile, the stock still looks good value at 14.6 times forward earnings. That’s noticeably cheaper than Coca-Cola (22.2).
A potential risk to bear in mind here is the rise of GLP–1 weight-loss drugs, which can reduce cravings for sugary drinks. However, the firm’s portfolio is increasingly diverse and also includes bottled water and healthier plant-based beverages.
Ben McPoland does not own shares in Coca-Cola HBC.
Coca-Cola Hellenic Bottling Company
What it does: Coca-Cola HBC bottles a broad range of non-alcoholic beverages in 29 countries across Europe and Africa.
Coca-Cola HBC’s (LSE:CCH) share price has rebounded strongly over the past year. It means the FTSE 100 drinks bottler has almost doubled in value since mid-2014.
There’s good reason to expect it to continue surging over the long term, too. On one hand, the firm can be considered a classic defensive stock.
Labels like Coke, Sprite and Fanta remain in high demand at all points of the economic cycle, providing the business with supreme earnings stability over time.
But Coca-Cola HBC’s substantial emerging market exposure also makes it an exciting growth share, in my opinion. The company’s push into fast-growing product categories like coffee and energy drinks also gives it a good chance to supercharge profits.
City analysts think earnings here will rise 26% in 2024. This leaves the firm trading on a mega-low price-to-earnings growth (PEG) ratio of 0.6.
Though Coca-Cola HBC faces significant competition from other industry heavyweights like PepsiCo and Keurig Dr Pepper, on balance I think it could be a great stock to buy.
Royston Wild owns shares in Coca-Cola Hellenic Bottling Company.
Marks and Spencer Group
What it does: Marks and Spencer is a leading British retailer selling food, clothing and homeware.
By Paul Summers. The revival of Marks and Spencer (LSE: MKS) in the last few years has been nothing short of astounding. Go back to 2022 and I could pick up the stock for less than a pound a pop. As I type, those shares change hands for just under £3.
There could be more gains to come, especially as the company stated in May that it was “confident” it would make more progress in its new financial year. This was after announcing a 58% jump in annual profit in the twelve months to March 2024 – far more than analysts were expecting.
Notwithstanding this, a rebound in inflation and further delay to interest rate cuts could succeed in keeping some shoppers away. This is also a low-margin business in an incredibly competitive space.
But with a price tag of 11 times forecast earnings, I don’t think Marks is overvalued yet.
Paul Summers has no position in Marks and Spencer
Rightmove
What it does: Rightmove is Britain’s biggest online property marketplace for agents, buyers, renters and developers.
By Oliver Rodzianko. Rightmove (LSE:RMV) is the UK’s most prominent digital property platform. Surprisingly, it’s currently a value opportunity, in my opinion. The reason this is rare is that the firm consistently delivers high growth, including an annual earnings growth rate of 25% over the past three years.
Currently, the price-to-earnings ratio for the shares has dropped around 24% from its 10-year median. This comes at a time when top analysts believe the company is going to continue to grow for the foreseeable future.
I think one of the things the business needs to be careful of at the moment is AI. A lot of new companies are going to start that utilise advanced machine learning tools. Therefore, management needs to make sure it stays competitive.
However, I can’t see Rightmove being outcompeted any time soon. Right now, I think the current valuation is a significant opportunity and potentially worth my cash.
Oliver Rodzianko does not own shares in Rightmove.
