Cheap FTSE 100 shares to consider buying after the Black Friday sales

Whatever bargains retailers are offering for Black Friday, stock brokers aren’t joining in. I reckon I see enough cheap shares anyway.

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My inbox has been full of Black Friday deals all week, but nobody’s offering discounts on cheap shares. Not that I’d rush out and buy a stock on a one-day deal, but I am lining up some candidates for the New Year.

I don’t need any sweetener offers anyway, as I reckon there are already lots of great value shares out there.

Here’s a couple that I think bargain hunters could do well to consider while they still look cheap.

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Best of both worlds

We often a face a trade-off between a low price-to-earnings (P/E) valuation and a high dividend yield. But right now, some shares offer both.

Legal & General (LSE: LGEN) is one, with a forecast dividend yield of 9.3%. A consistent annual return like that could be enough to turn a £20,000 Stocks and Shares ISA allowance into nearly £120,000 in 20 years if it’s reinvested each year.

And the P/E ratio? Forecasts for this year put it at around 12, which might not scream “buy me“. But with earnings per share (EPS) predicted to treble between a rotten 2023 and a much better 2026, it could drop to under nine.

Created with Highcharts 11.4.3Legal & General Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Insurance ups and downs

The insurance sector can be cyclical however, and P/E values can sometimes mislead depending on what part of the cycle we’re in.

Also, financial sector dividends can be among the first to suffer in any economic downturn. And never mind new downturns, we’re still not clear of the last one.

Do the low Legal & General share price and high dividend offer enough to compensate for the risk? I think they do. But I really think only those wth a long enough horizon to cover the likely ups and downs should consider a stock like this.

More sector weakness

Talking of ups and downs, housebuilder Taylor Wimpey (LSE: TW.) has been through a few.

We don’t have quite the same potentially winning value combination as Legal & General. But its 7.3% forward dividend is still up with the best in the FTSE 100. And the high-ish P/E for 2024 of 17 is forecast to drop to 11 by 2026.

Oh, and the dividend yield could reach 7.7% by then, according to City predictions.

Created with Highcharts 11.4.3Taylor Wimpey Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Volatile share price

The Taylor Wimpey share price fell back in November after a bullish couple of years.

The recent Budget, it seems, is the cause. An extra £25bn of employer national insurance contributions will squeeze profit margins. And the Bank of England says the budget could push inflation up to 3% in 2025, which won’t help mortgages.

It takes some of the shine off Taylor Wimpey’s 7 November update. CEO Jennie Daly put 2024 UK sales “towards the upper end of our guidance range of 9,500 to 10,000 homes“.

That’s after “steady signs of improvement in customer demand as mortgage rates reduced and affordability improved“.

Buy consensus

Whatever the short term might hold, City analysts have strong buy ratings on both these stocks. I have them on my ISA candidates list for early 2025.

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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.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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