My top 3 bargain FTSE shares! But which is cheap, cheaper and the cheapest?

Having identified his three favourite undervalued FTSE 100 shares, our writer attempts to rank them in order of value for money.

| 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 Caucasian girl showing and pointing up with fingers number three against yellow background

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.

I believe the FTSE 100‘s stuffed full of bargains at the moment. I’ve picked the three I think currently offer the best value.

Out of fashion

Shares in JD Sports (LSE:JD.) currently (16 August) change hands for 28% less than the stock’s 52-week high.

It’s been caught in the crossfire following a downgrade in Nike’s sales forecast. The American sportswear giant is believed to account for 50% of JD Sports’ revenue so this isn’t surprising.

Should you invest £1,000 in TBC Bank 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 TBC Bank made the list?

See the 6 stocks

But the retailer sells multiple brands including some that are capitalising on Nike’s problems. And the company has an impressive track record of growing its earnings.

With a price-to-earnings (P/E) ratio of around 10 — half its average over the past decade — I recently decided to buy some stock.

Source: JD Sports website / PBT = profit before tax

Ringing the changes

On the back of stagnant revenue and falling earnings, Vodafone’s (LSE:VOD) shares appear to be stuck in the 65p-80p range. I suspect that’s why the company’s restructuring its operations and selling its under-performing divisions in Spain and Italy.

There’s no guarantee its turnaround plan will work — others have failed. And I’ve concerns about the company’s debt levels.

But I’ve confidence in its CEO. And the company’s recent trading update — for the first quarter of its March 2025 financial year — hinted at a recovery under way. I believe now could be a good entry point.

To consider the stock’s potential, I’ve been looking at Deutsche Telekom, Europe’s largest telecoms company. If the same earnings multiple (13.7) was applied to Vodafone, its shares would be 46% higher.

Ready for take-off

International Consolidated Airlines Group (LSE:IAG) shares are currently trading 9% below their 52-week high. Analysts are expecting earnings per share of 40.97 euro cents (35.18p) in 2024. If correct, this implies a P/E ratio of 4.8.

This looks cheap compared to easyJet — the only other airline in the FTSE 100 — which has a forward earnings multiple of 6.9. If the same valuation was applied to IAG, its stock would be 43% higher (243p).

The pandemic reminded us of the risks associated with the airline industry. Also, IAG’s profits have been impacted by inflation. Fuel costs are largely out of its control. And a tight labour market’s putting pressure on salaries. In August last year, British Airways agreed a 13% pay rise (over 18 months) with its 24,000 staff.

During 2023, these two expense headings accounted for exactly 50% of its operating expenditure.

But I think now could be a good time to consider it. Passenger numbers are increasing once more, net debt’s falling, its dividend has been reinstated (albeit a modest one) and many are expecting oil prices to fall over the next 12 months.

Brokers appear to agree with my assessment. Of the 16 analysts covering the stock, 11 give it a Buy rating and five are Neutral.  

Bank of America and RBC Capital Markets both have a price target of 230p. Of course, there’s no guarantee the share price will reach this level but it illustrates that some rate the stock highly.

League table

I already own two of these shares. And if I had some spare cash, I’d add IAG to my portfolio. However, ranking them in ascending order I’d put Vodafone third (cheap), followed by IAG (cheaper) and JD Sports (cheapest).

Created with Highcharts 11.4.3International Consolidated Airlines Group + Vodafone Group Public + JD Sports Fashion PriceZoom1M3M6MYTD1Y5Y10YALL16 Aug 20197 Apr 2025Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '250www.fool.co.uk

Should you buy TBC Bank now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation 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.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. James Beard has positions in JD Sports Fashion and Vodafone Group Public. The Motley Fool UK has recommended Nike and 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

2 beaten-down UK shares that now look really cheap

Looking for cheap shares to consider for the long term? These two British stocks offer a lot of value right…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

As stocks tank, is this a rare chance for ISA investors to get rich?

Shares have collapsed globally and valuations are becoming, on paper at least, a lot more attractive. Dr James Fox explores…

Read more »

Investing Articles

2 strong FTSE 100 dividend shares to consider as recessionary risks increase

Looking for secure passive income stocks to consider buying as thumping trade tariffs loom? Here are two FTSE 100 dividend…

Read more »

Investing Articles

Can Greggs shares offer shelter from Trump’s tariff chaos?

Greggs' shares have plummeted in recent months. But with very little exposure to the US or tariffs, could the stock…

Read more »

Investing Articles

Income of almost 12%! 3 stunning FTSE dividend stocks now have double-digit yields

Harvey Jones is amazed by the sky-high income on offer from these FTSE 100 dividend stocks, but he's also aware…

Read more »

Investing Articles

As vehicle sales slump, should I buy Tesla stock on the dip?

Andrew Mackie assesses whether Elon Musk’s political leanings are destroying the Tesla brand or is now the time to be…

Read more »

Dividend Shares

Why this stock market correction is great for passive income investors

Jon Smith explains why those looking for passive income from dividends could benefit from the move lower in stock prices…

Read more »

Investing Articles

The FTSE’s tanking. Here’s what I’m doing

In the blink of an eye, the FTSE has fallen more than 10% due to economic uncertainty. Here’s how Edward…

Read more »