2 of my favourite FTSE 100 shares have just plunged 12% and 10%! Time to buy?

Harvey Jones is in bargain-hunting mode and wondering if these two FTSE 100 shares could make exciting purchases after falling sharply in the last month.

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I love picking up bargain FTSE 100 shares after they’ve suffered a short, sharp sell-off. Two stocks on my watchlist are now in that exact position. Should I buy them?

The first is pharmaceuticals giant AstraZeneca (LSE: AZN). I’ve been desperate to buy its shares for yonks, but decided they were too expensive after repeated long-term outperformance.

Suddenly, and to my surprise, the AstraZeneca share price is down 11.88% in the last month. So what sparked the sell-off?

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

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What’s gone wrong?

The shares boomed for years as CEO Pascal Soriot successfully replenished the company’s drugs pipeline. However, in September, it’s suffered a couple of setbacks as a new lung cancer and breast cancer treatment both underwhelmed. The results overshadowed successes elsewhere, including US approval for its Fasenra inflammatory disease drug.

Pharmaceutical companies will always have their share of successes and failures, but a long-term investor like me can look past them.

What I’m still struggling to look past is that the shares trade at 35.01 times earnings, well above the average FTSE 100 valuation of around 15.3 times. According to its discounted cash flow (DCF) ratio, they’re overvalued by 7%.

I won’t quibble too much about the relatively low 2.03% yield, that’s largely down to the booming share price. The stock’s up just 5.6% over one year, but almost 60% over five years.

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

There’s so much to like about AstraZeneca, including gross margins of 75.69%, and a 16.83% return on equity. But it isn’t a blinding bargain, so I’ll wait to see if it gets a bit cheaper.

Housebuilder Barratt Developments (LSE: BDEV) has also had a rocky month, its shares falling 10.35%. Over one year, they’re up just 5.98%.

Created with Highcharts 11.4.3Barratt Redrow PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

So what’s up with Barratt? Isn’t the sector supposed to be booming in anticipation of falling interest rates and Labour’s house-building spree?

Barratt is also heading south

Barratt’s gearing up for that by forming a master developer platform with UK government agency Homes England and Lloyds Bank, which will focus on large building sites.

That’s all in the future though. On 4 September, Barratt reported a 75% plunge in full-year profits from £705m to just £170.5m. It pinned that on cost-of-living pressures, higher mortgage rates and low consumer confidence. Completions fell 18.6% to 14,000, although this was at the upper end of expectations. It’ll build even fewer homes in 2025.

Now here’s the killer. It halved the annual dividend to just 16.2p a share. Adding to the uncertainty, it’s pressing ahead on with its £2.5bn takeover of rival Redrow, despite competition concerns.

Given the problems, I’d hoped Barratt’s shares would be cheaper. Today’s trailing P/E of 17.48 times earnings doesn’t blow me away. And while the trailing yield’s a blockbuster 6.89%, it’s forecast to fall to just 3.21% next year.

I’m also worried that Labour will struggle to turn its housebuilding dream into a reality. So I won’t buy Barratt either. I can see much better value elsewhere on today’s FTSE 100.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p 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 10%, 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

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca 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.

Like buying £1 for 51p

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

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