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A cheap FTSE 100 stock I’d buy right now

In a brief nod to easyJet (LSE: EZJ) last week I celebrated the twin drivers of the company’s bright growth outlook: its ambitious expansion programme to spread its European wingspan, and an environment of bulging demand for budget travel.

I’m delighted to say that the FTSE 100 airline’s bright quarterly update last week affirmed my bullish viewpoint.

The low-cost airline declared that it would report “a strong performance” for the fourth quarter, the result of “robust customer demand driving outperformance in both our passenger and ancillary revenue growth, and strong profitability.”

While industrial action by aviation workers in Europe and air traffic restrictions remain a big problem, passenger numbers (excluding those travelling to or from its new German home of Berlin Tegel) have risen 5.4% in the 12 months to September to around 84.6m, easyJet said.

A predicted capacity increase to some 90.3m seats, up 4.2% year-on-year, is expected due to the firm’s expansion programme. And this in turn is predicted to have pushed total reported revenue (including the contribution from Tegel) to approximately £5.9bn versus £5bn in fiscal 2017.

To top off a quite-brilliant update, easyJet advised that it will deliver pre-tax profit of between £570m and £580m, at the upper end of previous guidance.

Far too cheap

Despite its latest brilliant statement, the Luton business continued to see its share price decline at the end of last week. The sell-off that set in at the top of the summer has now seen easyJet’s market value shrink by more than 20% over the last three months alone.

I believe that the broader investment community is greatly underestimating the airline’s exceptional growth outlook, not just in the medium term, but in the years ahead too. The City expects easyJet to follow a predicted 44% earnings rise in the fiscal year just passed with a 17% rise in the current period.

Indeed, right now the company carries a forward P/E ratio of 9.4 times, sitting comfortably inside the widely-accepted value region of 15 times and below. I reckon easyJet’s one of the hottest tickets in town at current prices.

Another growth great

While you’re here I’d like to draw your attention to Associated British Foods (LSE: ABF), another blue-chip share with unbelievable growth prospects.

It’s a little more expensive than easyJet, the food ingredients and retail giant carrying a forward P/E ratio of 16.8 times. The business is anticipated to follow a 5% earnings advance for the year to September 2018 with a 3% rise in the fledgling period, and latest trading details convince me that it can deliver sustained profits growth.

In early September it declared that “strong profit performances this year from Primark, Grocery, Agriculture and Ingredients are expected to more than offset the adverse effect of lower EU sugar prices.”

These divisions are likely to continue going from strength to strength, particularly Primark where sales are anticipated to have risen 5.5% last year and are could keep climbing as expansion continues across Europe and the US. Associated British Foods is worth a look from all serious growth hunters right now.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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.