The Motley Fool

The Footsie is rising but these FTSE 100 stocks still look cheap to me

Image source: Getty Images.

One month ago, the FTSE 100 did not look like the most appealing place to invest. Coronavirus cases were at a record high and a second lockdown was starting in England. Fast-forward a though, and news of successful vaccines has greatly increased investor confidence. This has been reflected in the FTSE 100, which has risen a staggering 18% since the start of November. While I believe that many FTSE 100 stocks are now overpriced after this rise, there are still a number of opportunities in the market. These are my personal favourites.

A dividend stock

Aviva (LSE: AV) has bounced back well from the start of the crisis, with the insurance company posting resilient earnings and making some good business moves. For example, it is making good progress in simplifying the business and focusing on its core markets in the UK, Ireland and Canada. This has included the sale of both Aviva Singapore and Aviva Vita in Italy for a combined £2bn. Such simplification of the business will hopefully allow the company to grow profits, in turn increasing long-term shareholder value.

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...

It may also seem ironic to call Aviva a dividend stock, despite the fact that it has cut its dividend by a third. But in comparison to other FTSE 100 stocks, a dividend yield of over 6% is extremely impressive. In addition, although disappointing to shareholders, the dividend cut seems very wise. Firstly, it will allow the insurer to deleverage, which in turn should strengthen the balance sheet. Secondly, it will also allow the group to increase the dividend in the years ahead. These increases are expected to be either low or mid-single-digits each year.

This FTSE 100 stock is still down 45% this year

BP (LSE: BP) is the other stock I think is far too cheap. Although oil prices remain very low, and problems still abound in the industry, BP shares do look set for a recovery. It has also been boosted by news of vaccines, which should help increase demand for oil.

But vaccines are not the only cause for optimism. For example, the third-quarter trading update was fairly positive, as shown by a profit of $100m. Although significantly lower than the $2.2bn last year, this is still a very good result in challenging conditions. Even more impressive was the fact that net debt has fallen to $40.4bn. This is compared to a figure of $46.5bn a year ago. While the gearing ratio is higher than the company will want, I am very encouraged by these figures.

Alongside its transition into greener energy, these recent results increase my confidence for a long-term recovery. Of course, the road to recovery will not be instant, but a dividend of over 6% should help satisfy investors for the short term. I’d therefore snap up this FTSE 100 stock now while it remains under 300p.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Stuart Blair owns shares in Aviva and BP. 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.

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.