The Motley Fool

2 FTSE 100 stocks that look absurdly cheap right now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Stack of new one pound coins
Image source: Getty Images.

Despite a strong outlook for the British housing market The Berkeley Group (LSE: BKG), like many of the FTSE 100’s homebuilders, can be picked up for next to nothing today.

City predictions of a 9% earnings rise in the 12 months to April 2018 would keep the Cobham company’s long-running growth story intact if proven correct. And this projection makes Berkeley a bona fide bargain today, creating a prospective P/E multiple of 8.1 times.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

I see there being plenty of scope for an upward revision in this forecast, a common occurrence across the housebuilding sector across the past year, as well as the 31% profits slip forecast at Berkeley for next year.

Last month the business advised that pre-tax profits leapt 36% during the six months to October, to £533.3m, a result that encouraged it to lift its pre-tax profit guidance for the five years beginning May 2016 to £3.3bn from £3bn previously. This comes as little surprise as a combination of supportive lending conditions and gaping homes shortages drives demand for its new-build properties.

And this bright profits outlook is expected to underpin generous dividends too.  A total reward of 181.3p per share is anticipated for fiscal 2018, yielding 4.4%. And the dial moves to 4.9% for next year thanks to the expected 203.6p dividend.

Just too cheap

Another share that value hunters should give more than a passing glance to today is Footsie new boy DS Smith (LSE: SMDS).

The corrugated packaging giant also has a long history of unbroken earnings creation under its belt, and City analysts expect this trend to keep rolling for some time yet — advances of 4% and 11% have been forecast for the years to April 2018 and 2019 respectively.

Such forecasts mean that DS Smith can be picked up on a forward P/E ratio of 14.9 times, just below the benchmark of 15 times that signals value for money.

What’s more, the FTSE 100 business, like Berkeley Group, also offers plenty to stir dividend chasers. Its record of relentless profits growth has allowed payouts to rise at a fair lick, and with further progress in the offing, last year’s 15.2p per share reward is predicted to improve to 16.3p this year and to 17.8p in fiscal 2019.

As a consequence, yields for this year and next stand at a bulky 3.2% and 3.5%.

DS Smith and its peers have been under no little pressure recently as rising paper costs have impacted margins. But the company is passing these higher input costs on to its customers with improving success, and is making terrific progress on meeting its 8% increase target.

For share pickers seeking emerging market exposure in particular it is certainly difficult to look past DS Smith, in my opinion. Through targeted M&A the business has been steadily boosting its footprint across Central and Eastern Europe, and it has plenty of financial firepower to keep the bolt-on buys coming.

But M&A is not the whole story, the London-based business also planning to build new box plans in Europe and the US to meet the needs of its FMCG clients. All told, I reckon DS Smith is a terrific selection for those seeking exceptional earnings growth in the near-term and beyond.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended DS Smith. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.