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The best cheap FTSE 100 shares I’d buy right now

It’s not easy to go against the crowd. But if you can find the best quality cheap FTSE 100 shares, it would be a huge portfolio boost in troubled times.

Right now you’re an investor in markets likely to trend sideways for the foreseeable future. So you have to use all the weapons in your arsenal to get the best possible return.

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This requires planning, foresight, a strong hand on the tiller, and the wisdom to see what the herd can’t.

Stand out from the crowd

Fabled contrarian Warren Buffett famously said: “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is.”

For me, British Gas owner Centrica (LSE:CNA) is the ultimate turnaround stock. Hear me out. It has all the elements I’m looking for from cheap FTSE 100 shares. One, its share price is beaten down. Two, it has huge financial firepower. Three, it’s not trendy. It’s about as popular as a fart in a lift.

I read one assessment that urged investors to sell at 34p last month. Since then, the share price has gained 26%! But there’s much further to go in an upwards direction in my view.

At a P/E ratio of 5.7, and a trailing dividend yield of 11.6%? These are definitely dirt cheap FTSE 100 shares.

Of course, CNA paused this year’s dividend to save £200m in cash, a prudent move in these times.

And the market has responded well, but slowly. That’s why I think the best time to strike is now. The dividend will return in full force in 2021/22, so patience will be key.

Strength in numbers

A new broom sweeps clean, and recently-installed CEO Chris O’Shea is on a mission.

He’s not afraid to say what needs to be said. “I believe that our complex business model inhibits the relentless focus I want to give our customers,” he explained, outlining plans to slash £100m from costs this year alone.

The harsh reality is that we have lost over half our earnings in recent years [but] we have great people, strong brands trusted by millions and leading market positions. ”

Now he’s undertaking a massive streamlining operation, cutting middle-management in half.

Go long with cheap FTSE 100 shares

Consider this. If it was such a terrible business, wouldn’t all the world’s largest money managers be shorting the stock — betting on it to go down? Only a single one is, for 0.6% of its shares.

Sharks don’t hesitate to circle when they smell blood in the water. Just look at Cineworld. Six of the world’s richest funds have laid hefty bets against 6% of the debt-heavy cinema chain’s entire share capital.

The fact is that Centrica has over 24 million customers on the hook long term.

It has bought faster-growing firms with complementary businesses, like smart heating and lighting tech firm Hive, and highly-rated plumbing expert Dyno-Rod. With a third of UK homeowners planning to carry out home improvements worth £61bn post-lockdown, there are clearly large cross-selling opportunities to be had.

A key addition to Buffett’s mantra is that you’re not necessarily right to buy cheap FTSE 100 shares simply because the crowd disagrees. “You are right because your data and reasoning are right.” I believe my data and my reasoning are right.

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Tom Rodgers has no current position in the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.