My portfolio contains a wide and wonderful range of FTSE 100 stocks. Following the index’s 18% rise in 2025, I’m looking to add more brilliant blue-chips to my portfolio.
More specifically, I’m looking for underpriced gems with scope for particularly exceptional gains next year. Diageo (LSE:DGE), Berkeley Group (LSE:BKG) and Rio Tinto (LSE:RIO) are three such stocks I think might soar in 2026 and are worth considering.
Want to know why?
Recovery stock
At 13.2 times, the price-to-earnings (P/E) ratio on Diageo shares is substantially below the 10-year average of 21 times.
I’m not surprised by this bargain basement reading. As a shareholder, I recognise the enormous challenges it faces such as tariff pressures, weak consumer spending and rising demand for non-alcoholic drinks.
Yet I’m hopeful 2026 could be the start of a turnaround for the Guinness maker. Conditions in the US, Diageo’s largest market, are improving rapidly, as this month’s blockbuster Q3 growth numbers show.
Things could get even better too across all the company’s regions if (as expected) interest rates keep toppling.
I’m also hopeful Diageo’s share price could rebound as its new chief executive cracks the whip. Former Tesco saviour Dave Lewis has a strong record of resurrecting battered businesses.
London calling
Housebuilders would also gain significantly from further interest cuts next year. Building society Nationwide expects average home price growth of up to 4% in 2026.
In this climate, I think Berkeley could be in pole position to capitalise on this. Its P/E ratio of 11.8 times is among the cheapest among the UK’s listed builders, leaving substantial room for a price rebound.
I’m also encouraged by recent data on the London housing market, as Berkeley generates the lion’s share of profits from the capital and surrounding counties.
Estate agent Hamptons says homebuyer migration away of London has dropped to its lowest level since 2013. A continuation of this trend could significantly boost investor appetite for the FTSE 100 stock.
On the downside, sales of its newbuilds could disappoint if low growth continues in the UK. But with mortgage rates falling, I’m confident of a strong year ahead.
All-round bargain
Rallying industrial metal prices have supercharged Rio Tinto’s share price in late 2025. But the mining giant still offers tremendous value, based on expected earnings.
Its forward P/E ratio is just 11. More impressive is its price-to-earnings growth (PEG) multiple of 0.8. Any ratio below 1 implies bargain basement territory.
Key commodities including iron ore and copper have surged on improving supply/demand fundamentals. This could continue as China’s economy gathers pace, and infrastructure investment there takes off. At the same time, mounting production challenges across the base metals are supporting price forecasts into the new year.
There are possible challenges facing Rio Tinto, like rising iron ore supply from Australia and Brazil that could dent prices. But on balance, things are looking good, and especially as the company accelerates cost cuts (it announced $650m of cost savings earlier this month).
A 5.2% dividend yield for next year underlines the miner’s value credentials. This is miles above the 3% average for FTSE 100 stocks.
