While the Greek debt crisis continues to leave many investors feeling rather nervous about the future of the FTSE 100, there are a number of stocks on the UK’s leading index that appear to be well-worth buying at the present time. Certainly, their valuations may come under further pressure if the situation in the Eurozone continues to worsen, but for long term investors their prices should hold vast appeal.
For example, Imperial Tobacco (LSE: IMT) (NASDAQOTH: ITYBY.US) is one of the most reliable, consistent and defensive stocks around and yet its share price has fallen by almost 3% in the last month, as the FTSE 100 has dipped by 4% in the same time period. However, the outlook for cigarette and e-cigarette sales remains exactly the same as it was prior to the Greek ‘no’ vote and the crisis talks that have occurred in recent weeks between Greece and its creditors. As such, there seems to be little reason to justify Imperial’s price fall – especially since the company is forecast to increase its bottom line by 12% next year and already trades on a price to earnings growth (PEG) ratio of just 1.1.
Similarly, Lloyds (LSE: LLOY) (NYSE: LYG.US) continues to make excellent progress following a dismal handful of years during the financial crisis. Certainly, its financial outlook is less robust than that of Imperial Tobacco, but its 3% share price fall in the last months is difficult to justify when it already trades on a price to earnings (P/E) ratio of 10.2. That rating indicates substantial upside – especially when Lloyds is doing all of the right things when it comes to improving its long term financial outlook.
For example, Lloyds has undertaken considerable restructuring, with its management team seemingly a step ahead of many of the bank’s peers with regard to cost-cutting and efficiencies. Although painful in the short run, this has meant that, today, Lloyds compares very favourably to its rivals based on the cost:income ratio and, looking ahead, this should allow it to deliver real value for its shareholders.
Of course, the challenges in the Eurozone are bad news for travel operator, TUI Travel (LSE: TUI). Its shares have plunged by 12% in the last month, with the terrorist attack in Tunisia also hurting investor sentiment. However, for long term investors, now seems to be a great time to buy a stake in TUI, with the company forecast to increase its bottom line by 24% in each of the next two years. And, with its shares trading on a PEG ratio of just 0.6, it appears to offer excellent growth at a very reasonable price.
Clearly, the situation in Greece could worsen and the FTSE 100 may fall in the short run. However, Lloyds, Imperial and TUI are top quality companies trading at hugely appealing prices. Therefore, for long term investors, they appear to be well-worth buying right now.
Peter Stephens owns shares of Imperial Tobacco Group and Lloyds Banking Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.