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2 cheap FTSE 100 stocks to buy in August

Screen of price moves in the FTSE 100
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I’d be very happy to buy more shares in FTSE 100 soft drinks giant Coca-Cola HBC (LSE: CCH) for next month. The beverages bottler is due to release half-year trading numbers on Thursday, 12 August. As a shareholder myself I’m expecting another sunny set of financials as Covid-19 restrictions are steadily unwound.

This was underlined by The Coca-Cola Company’s trading update earlier this week. In it, the fizzy pop maker said that business was “rebounding faster than the overall economic recovery”. And encouragingly for Coca-Cola HBC, the US share said that growth had been led in large part by Russia and Nigeria. These two territories accounted for around a quarter of Coca-Cola HBC’s total turnover in 2020.

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The Coke Zero gamble!

Of course the recovery is in danger of any worsening in the Covid-19 crisis. Though this is not the only big risk FTSE 100 investors need to bear in mind. Coca-Cola’s decision to change the recipe of its Coke Zero Sugar drink could also smack revenues hard if it’s not to consumers’ tastes. Let’s not forget the company’s disastrous launch of the so-called New Coke back in the mid 1980s.

A Coca-Cola No Sugar bottle

On the other hand, though, the recipe change could significantly boost sales if it does indeed bring the taste of the low-sugar drink closer to that of its classic Coke ranges. It’s also worth remembering that Coca-Cola has a terrific track record when it comes to product innovation. More recently the launch of its Coke Orange Vanilla line helped to turbocharge group sales just prior to the pandemic.

City analysts think that Coca-Cola HBC’s earnings will rise 24% year-on-year in 2021. This leaves the company trading on a forward price-to-earnings growth (PEG) ratio of just 0.9. A reminder that a reading below 1 suggests that a stock could be undervalued by the market. At these sort of prices I’m thinking of buying more of the FTSE 100 firm for my Stocks and Shares ISA.

Another cheap FTSE 100 stock to buy

I also think that the ITV (LSE: ITV) share price could be too cheap to miss. A rebounding advertising market means that City brokers think earnings here will rise 4% in 2021. This leaves the broadcaster dealing on a forward price-to-earnings (P/E) ratio of 10 times.

In fact, I might be tempted to buy ITV too before half-year results on Wednesday, 28 July. Ad revenues at the FTSE 100 firm have been recovering strongly since the end of last year. And industry data suggests that marketing spend has continued picking up pace. The latest IPA Bellwether Report showed total expenditure rising at its sharpest pace since the beginning of 2019 in the second quarter.

It’s true that ITV faces a significant long-term threat from the likes of NetflixAmazon and Disney. However, the growing popularity of its own ITV Hub video on demand service gives me reason to be optimistic about the company’s fortunes in the streaming wars.

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Royston Wild owns shares of Coca-Cola HBC. The Motley Fool UK owns shares of and has recommended Netflix and Walt Disney. The Motley Fool UK has recommended ITV. 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.

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