Even after a barnstorming 2025, the FTSE 100 still looks cheap on many metrics. What unheralded stocks are lurking in the index? What brilliant bargains could lead the vanguard if the Footsie surges in 2026?
I grabbed that ever eager-to-please invention, ChatGPT, to give me a few pointers. I asked it: “What are the FTSE 100 hidden gems for 2026?“
While ChatGPT did supply me with some food for thought, I’ll firstly point out that large language models are far from reliable for financial advice. This was conspicuously evident in its own answer…
Its first suggestion was Intercontinental Hotels Group but, apropos of nothing at all, it started referring to it as Associated British Foods. The talk of Holiday Inn margins shifted seamlessly into the strong cash generation of Primark. Holiday Inn is an Intercontiental Hotels Group brad, while Primark is an Associated British Foods brand.
ChatGPT really put the ‘artificial’ into artificial intelligence with that one.
Bouncing back
As for the more coherent choices, while I would say NatWest (LSE: NWG) is more of a household name than a hidden stock, it might fit the gem part of the criteria.
It was not to long ago the bank was weathering a crisis. Its subsidiary, Coutts, shut down the bank account of potential future PM Nigel Farage on dubious grounds, causing a media firestorm.
The firm bounced back handsomely. The shares are up 205% in the last two years. I’ve been bullish on banks for a while and think NatWest could be well-positioned after the government recently fully exited its stake.
A second choice is one of the big tobacco stocks, Imperial Brands (LSE: IMB). While some may want to steer clear for ethical considerations of investing in a tobacco producing business – and the decline of cigarettes is a huge risk for the future – there are a few interesting aspects to this company.
The company is a cash cow. It prints billions every year and delivers some of the biggest dividends on the index. Income hasn’t even started declining and some projections have the number of cigarette smokers to continue rising for years.
The demise of smoking has been predicted since at least the 1980s. Interestingly, this seems to have caused unloved tobacco stocks like Imperial and its fellow FTSE 100 member British American Tobacco to offer huge market-beating returns even up to the present day.
Fourth choice
The fourth and final suggestion was £74bn market cap pharma giant GSK (LSE: GSK). The company, formerly known as GlaxoSmithKline, is another where my AI chum might be stretching the definition of ‘hidden’ a touch. But it might have some real potential.
Pharmaceutical companies live and breathe on their pipeline. A new drug can completely change a company’s fortunes. Novo Nordisk shareholders can attest to that after the development of appetite-suppressing drugs like Ozempic or Wegovy. So GSK’s pipeline of dozens of treatments and vaccines sounds promising.
Another fact worth mentioning is valuation. GSK trades at around nine times forward earnings. This is lagging significantly behind its peers. Compare to fellow FTSE 100 AstraZeneca with a forward P/E ratio of 17. This suggests the shares might be at a low ebb.
Looking at downsides, this is perhaps a company in stagnation – a share changed hands for more money back in the 90s! – but might be worth considering nonetheless.
