Fortunately, there’s a relatively quick way to try and identify cheap shares. And I’ve used it to find one example of what I believe is a bargain-basement value stock.

A quick overview

As its name suggests, the price-to-earnings (P/E) ratio measures a company’s share price relative to its profit. In simple terms, it defines how much investors are prepared to pay for £1 of earnings. In theory, the lower the number, the cheaper the shares.

However, it’s important to apply a bit of judgement when using the P/E ratio. A low figure could imply that investors are concerned about the company’s prospects. For example, earnings might be going in the wrong direction. And ratios will vary across different industries. Capital-intensive sectors tend to have lower valuation multiples.

Out of fashion

But I think it makes sense to track a stock’s P/E ratio over time. And that’s what makes me think that shares of JD Sports Fashion (LSE:JD.) offer tremendous value at the moment (9 April).

Based on forecast earnings per share (EPS) of 11.37p for the year ended 31 January 2026 (FY26), the stock’s trading on an extremely attractive 6.5 times earnings. The five-year average (median) is 15.1.

And if analysts’ forecasts prove to be accurate, the sports retailer’s forward P/E ratios are 6.5 (FY27) and 5.9 (FY28).

A challenging market

But remember what I said earlier about a low number being a possible warning sign? Well, it could apply here.

The group’s been growing by buying new stores but its like-for-like (LFL) sales have been falling. During the 48 weeks to 3 January, they were down 2.1% compared to the same period a year earlier. The worst-performing region was the UK with a reported 4% drop.

It’s estimated that Nike’s products account for around half of JD Sports’ sales. But the American sportswear giant’s been struggling lately. There are some early signs that it’s recovering but it’s still not out of the woods.

In addition, concerns have been raised that the British retailer’s core demographic of 18-to-24-year-olds are seeing their living standards affected by artificial intelligence solutions replacing entry-level jobs.

Not all bad

Despite these challenges, I still think the group’s shares are in bargain territory.

Over 60% of the group’s stores are now in North America, which are performing better than its European ones. Also, it’s not totally reliant on Nike. Other brands, Adidas being the most notable one, are doing very well at the moment. This year’s football World Cup could also lift sales.

And JD Sports remains cash generative. With free cash flow of over £400m in FY26, it should have the scope to refresh some of its stores in an attempt to get its LFL sales growing again. The consensus of those analysts that have modelled the group’s cash flow potential reckon the stock’s 26% undervalued.

Weighing everything up, I believe JD Sports is well worth considering by investors today.

The post A P/E ratio of less than 7. Is this a red-hot value share to consider now? appeared first on The Motley Fool UK.

The recent fall

I note two triggers for the move lower this year. One has been some prominent analyst price downgrades, and the other was cautious guidance from management. Back in February, the research team at Deutsche Bank cut their target price for JD Sports from 95p to 85p. They flagged concerns that JD may be out of step with shifting fashion trends, particularly as consumers rotate away from some of its core styles.

At the same time, Q4 results released in January showed UK and Europe sales fell by 5.3% and 3.4%, respectively. Management warned of “muted market growth” ahead, with profits expected to dip year on year. It’s true that strained consumer finances are causing some to spend less. Furthermore, the business is also heavily exposed to big brands like Nike, and when those suppliers have their own problems (which Nike has) JD feels it too. Its share price is down 11% in the last year.

A positive outlook

Despite all the noise, the underlying business is still growing. North America Q4 revenue rose by 5.3% versus the same period last year. Asia Pacific grew by 9.6%! JD maintains a strong global footprint with thousands of stores worldwide. This means it’s diversified, helping right now even when some regions are underperforming.

It’s also well-positioned to capitalise on the growing athleisure retail trend. Add into the mix the increase in running as a hobby, with the latest results noting “positive momentum in running” sales.

Crucially, when it comes to calling the stock a bargain, I have to refer to the valuation. It has compressed dramatically, with the price-to-earnings ratio at just 5.69. I use 10 as a fair benchmark, so anything below that I’d classify as undervalued. The low ratio suggests investors are factoring in a lot of bad news already for the year ahead. If things don’t turn out as gloomy as some predict, the stock right now looks like a bargain given how much it could rally.

The bottom line

If JD can stabilise profit margins, adapt to changing trends (like the shift towards running brands), and continue to see strong growth in North America, there’s a strong case for the share price to move higher. There’s also an argument that short-term investors have been overly pessimistic, focusing on quarterly wobbles rather than long-term growth potential. Of course, risks relating to underperformance in the UK and Europe remain, but on balance, I believe the stock is the biggest bargain in the FTSE 100 right now and am thinking about buying it myself.

The post Is this the biggest bargain in the FTSE 100 right now? appeared first on The Motley Fool UK.

So far, we’ve had a correction, defined as a fall of 10%. A crash is a drop of 20%, and we’re nowhere near that today. In fact, in the four trading days before Good Friday (3 April), the FTSE 100 climbed 4.56% on hopes the Iran conflict might ease. The Strait of Hormuz remains largely blocked pressure, the oil price is climbing, and there’s talk of energy shortages. Yet markets remain calm.

Investors simply don’t know

Trying to second-guess stock movements is a mug’s game. Markets absolutely refuse to do what analysts say they will. The Motley Fool strategy is simple. Stay invested, think long term and avoid panic. And if markets do plunge, take advantage of the dip to buy top stocks at lower prices, and with higher yields.

When markets fell during the 2020 pandemic, they rebounded at remarkable speed. The same happened after Russia invaded Ukraine in 2022. Donald Trump’s ‘liberation day’ tariffs triggered panic. It didn’t last. Investors who sold out locked in losses and missed the recovery.

I’m not trying to time a crash, but I’m preparing in case we get one. I’ve sold just two stocks in my SIPP. The first is packaging group Smurfit Westrock. I bought this shortly before it shifted its centre of gravity to the US, which I hadn’t bargained on. I also exited cosmetics specialist Warpaint London as I’d found it too unpredictable. That’s left me with cash in my SIPP. If markets fall further, I’ll go shopping for cut-price shares.

I’m targeting value

One stock I hold and that’s also on my watchlist is JD Sports Fashion (LSE: JD). It’s had a torrid run, down 60% in the last three years. The cost-of-living crisis is the main reason. Inflation has driven up costs, as have UK employer’s National Insurance hikes, but shoppers don’t feel as flush as they were.

Middle East volatility has knocked its shares down another 10% in the last month. It looks staggeringly cheap, with a price-to-earnings ratio of 5.7. There’s no guarantee of a quick recovery. If oil prices go higher shoppers will have even less money in their pockets, and less to spend on trainers and sportswear.

Still, there are positives. JD is returning £200m to shareholders through buybacks in its 2026/27 financial year. It remains a strong global brand with a wide store footprint. It’s still making lots of money, forecasting adjusted pre-tax profit of £849m. Sadly, that’s down from £923m last year.

I’m not expecting a sudden turnaround. Sentiment may stay weak for some time. But this is the kind of stock I’ll consider buying if markets crash.

Playing the long game

I’m holding a diversified mix of shares across sectors, combining growth and income. I’d be happy to hold all of them, for five or 10 years, and with luck longer. I’m also looking forward to my dividends being re-invested at today’s lower prices.

At the same time, I’ve got cash ready to invest if opportunities arise. No one knows whether a crash is coming. But I feel I’m as ready as I can be.

The post If we get a stock market crash next week, I’m ready! appeared first on The Motley Fool UK.

With this mindset, I think the recent pullback in the index of the UK’s most valuable listed companies means there’s plenty of value to be had. And with their attractive valuations, here are a few stocks that have recently caught my eye.

Finding value

There are lots of ways of identifying cheap shares but probably the most common is the price-to-earnings (P/E) ratio. As its name suggests, this considers a company’s share price relative to its earnings per share (EPS). In effect, it reveals how much investors are willing to pay for every £1 of profit.

And by looking for stocks with a P/E ratio that’s currently lower than it has been in recent times, it’s possible to identify potentially undervalued stocks. However, a low ratio may indicate a fundamental problem.

But with the five I’ve recently identified I don’t think this is the case. In my opinion, even Diageo — which is experiencing falling revenue and earnings due to changing drinking habits — appears to me to have been over-sold by anxious investors.

Yes, all have suffered as a result of the war in the Middle East but, hopefully, this will be over soon.

Of course, I’d have to do more research before considering whether to invest in each of these five but one that I already own is JD Sports Fashion.

Even better

When I first took a stake, I thought the sports retailer’s shares were cheap. Since then, they’ve fallen significantly in the face of US tariffs and a slowing global economy. And the company’s share price could come under further pressure if artificial intelligence wipes out loads of entry-level roles, those that are typically held by JD Sports’ target demographic of 18-to-24-year-olds.

However, despite these threats, I think the group’s shares are now in bargain territory. The athleisure market’s proven to be very resilient in recent years. And Adidas is demonstrating that a 77-year-old brand can be fashionable with the right products and clever marketing. New entrants are also gaining traction.

Analysts are forecasting EPS of 11.37p for JD Sports’ January 2026 financial year (FY26). This implies a P/E ratio of 6.1 compared to a five-year average of 15.2. Based on forecasts for 2028, the multiple drops to just 5.5.

For FY27-FY28, analysts are expecting free cash flow of over £900m.

With the World Cup round the corner, Nike – a key partner of JD Sports — could get a bit of a boost which, in turn, would help lift the British retailer. But the self-styled ‘King of Trainers’ sells all brands of footwear and clothing so it’s not totally dependent on a change in fortunes for the American sportswear giant.

Personally, with its strong balance sheet and healthy cash generation, I think JD Sports is a value stock to consider holding for the long term. The group doesn’t have any immediate plans to buy more stores so I think it will be able to use its spare cash to refresh its existing footprint. On balance, I think the group – like many others on the FTSE 100 – is attractively priced at the moment.

The post Just look at these tasty FTSE 100 bargains! appeared first on The Motley Fool UK.

But might I do better just to forget about the stock market, enjoy the coming summer away from it, and come back later in the year when the geopolitical situation could be calmer?

Market timing can be hazardous

That could potentially save me from some value traps. After all, quite a few FTSE 100 shares look temptingly cheap to me right now – but whether that in fact turns out to be the case will be clearer a few months from now.

But there is a risk here. Many people try to time the market. However, a number of academic studies have shown that being out of the market even for a short time can risk significantly affecting long-term returns.

That is because those returns are disproportionately affected by a small number of trading periods.

So, sitting out of the market for coming months could potentially save me from some value traps. On the other hand, it might mean I miss out on some brilliant investing opportunities.

I’m on the hunt for bargains!

Take JD Sports (LSE: JD) as an example.

One way to look at the FTSE 100 retailer’s share price – down 21% since the turn of the year – is as a warning signal.

Snarled global supply chains could add costs to the multinational sportswear seller. On the demand side, consumers are increasingly squeezed and that could mean they are less willing to splash the cash on new trainers or workout gear.

If such a view turns out to be correct, my best move might be to cut my losses and dump my JD Sports stock.

But there is an alternative way to look at things: JD Sports looks like a potential bargain for a long-term investor and is therefore worth considering right now.

In fact, that is how I see things.

Why? JD Sports has a massive global network of branches as well as a big digital presence. It has spent years investing heavily in making its brand desirable for its target customers. It also has deep relationships with suppliers, especially Nike.

Right now, those strengths do not seem to be helping it much in the stock market. That is not surprising in a way: Nike itself is down 15% since the turn of the year.

But over time, I think JD Sports’ strengths will hopefully shine through. That may take years, but long-term investing takes patience.

Frankly, I am sorely tempted to buy more JD Sports shares at what I see as a bargain price. But it is already my largest position. In order to keep my portfolio sufficiently diversified, I will not be adding to my existing holding.

Fortunately, though, I see lots of other potential bargains in the FTSE 100 – and who knows whether they will be as cheap next week, let alone after summer?

The post Forget the FTSE 100 and come back after summer? Here’s my plan! appeared first on The Motley Fool UK.

In fact, we’ve already started to see valuations start to slip.

The FTSE 100, FTSE 250, Nasdaq 100, and S&P 500 have all dropped roughly 3%-5% since the end of January – a trend which, if it continues, could drag the markets into correction territory. And if that happens, I’ll be looking to snap up some quality stocks at cheaper prices.

So which sectors could contain the best bargains?

Which sectors should investors watch?

Let’s assume the worst and say the supply chain disruptions of energy exports from the Gulf states continue for the foreseeable future. With an estimated 15%-20% of global oil & gas supply at risk, the danger of surging energy costs is significant, especially in the UK, where gas is the primary driver of the price of electricity.

In this scenario, quite a few sectors could be hit hard. Higher energy bills during an already problematic cost-of-living crisis don’t bode well for the consumer discretionary sector. Travel, leisure, and hospitality would likely also have to endure some pain as consumers cut back on non-critical spending.

Higher energy inflation also doesn’t help British manufacturing. And if it leads to the Bank of England hitting pause on its interest rate cutting plans, debt-heavy real estate investment trusts could also come under increased pressure.

It’s a similar story for banking, where slower economic growth, paired with higher interest rates, drastically drives down borrowing demand from both businesses and individuals alike, particularly when it comes to mortgages.

But as experienced investors know, the best time to buy is often when everyone else is panic-selling.

A potential bargain?

Out of all the sectors at risk, consumer discretionary seems like it could be among the most vulnerable to a short-term sell-off. And high-quality, premium-priced stocks like Games Workshop could be worth mulling over as a long-term investment, if a more attractive price emerges.

But there are already some potential bargains that exist today. JD Sports Fashion (LSE:JD.), for example, is repeatedly being highlighted by institutional analysts as a cheap stock to consider right now.

The sports apparel/footwear retailer has seen its stock price struggle in recent years. And even since January, the group’s market-cap has shrunk by another 12%. But with the forward price-to-earnings ratio standing at just 6.5, the common consensus among experts is that a buying opportunity may have emerged.

With both Nike and Adidas undergoing a genuine commercial revival, JD Sports’ leading brand partners are helping the group bounce back. And while sentiment remains weak, it’s worth highlighting that its latest trading update did reveal some green shoots of recovery, particularly in North America.

Of course, shifting fashion trends and a leveraged balance sheet do pose a significant threat to the business, especially if wider discretionary spending starts to slow. But with JD Sport shares already trading below even the most pessimistic share price targets, these risks may already be priced in – something for opportunistic investors to consider.

The post Oil surges. Stock markets fall. I’m looking to buy cheap stocks appeared first on The Motley Fool UK.

Here are three stocks that have recently caught my eye.

Back down to earth

International Consolidated Airlines Group (LSE:IAG), owner of British Airways and four other operators, is having to cancel flights in the Gulf region, as well as deal with rising fuel costs.

On 12 March, European jet fuel prices hit an all-time high. Although it will have hedged some of its anticipated fuel demand, including up to 75% in the near term (not defined), this additional cost will have to either be absorbed by the group itself — hurting its bottom line — or passed on to customers with the risk of reducing revenue. It’s a lose-lose situation.

But the airline’s stock is currently trading on just six times its 2025 earnings. This could mean an amazing opportunity to buy a quality stock at a knock-down price. Only last month, its shares were changing hands for 20% more. Importantly, its airlines retain strong brands in their respective markets.

On the assumption that things return to normal soon, I think it’s likely to bounce back stronger than most. On this basis, it could be cheap enough to take a position.

Unfashionable

JD Sports Fashion (LSE:JD.) has a price-to-earnings ratio of only 6.3. This is based on analysts’ forecasts for its January 2026 financial year (FY26). Looking ahead to FY28, it drops to 5.8. The five-year average (median) is 15.4.

Problems at Nike, a key partner, are a risk. And another round of US tariffs could be a major issue.

However, a bit like air travel, the sportswear sector has a track record of defying expectations. One forecast I’ve seen expects the global athleisure market to grow by $525bn by 2035.

In its favour, JD Sports sells many brands and is much less UK-centric than it was. Its biggest market is now North America where this year’s World Cup is being held. It also retains a strong balance sheet and is expected to generate over £900m of free cash in FY27 and FY28.

Personally, I don’t think the group’s shares will offer such amazing value for much longer. Therefore, it could be one for long-term investors to consider.

One to bank on?

I’ve long thought that Barclays (LSE:BARC) is undervalued and the recent fall in its share price has reinforced my view.

Its balance sheet at 31 December 2025, disclosed a book value of £78.2bn compared to a current market cap of £54.3bn. This gives it a price-to-book ratio lower than any of the FTSE 100’s banks.

It also shares the joint lowest price-to-earnings ratio on the index. And I can’t see any obvious reason why.

Admittedly, the bank remains vulnerable to a global economic slowdown. Also, a lower interest rate environment could affect its margins. But Barclays has a diversified business model, both in terms of geography and the nature of its activities. This should offer some protection.

In addition, it plans to return £15bn to shareholders from 2026-2028 by way of share buybacks and dividends. On balance, I think value investors could consider taking a stake.

The post The FTSE 100’s full of value shares at the moment. Here are 3 to consider appeared first on The Motley Fool UK.

With the Middle East conflict continuing, there could well be more volatility in store. But buying quality stocks on the dip can give one’s investment returns a huge boost over time. I myself often use lower prices as an opportunity to buy discounted shares.

So which FTSE 100 fallers are on my shopping list today? There are several, but here are three of my favourites.

Out of fashion

JD Sports Fashion trades on a forward price-to-earnings (P/E) ratio of 8.2 times. That’s far below its 10-year average of 15-16, and reflects sustained sales pressure as consumers have trimmed spending.

Is the retailer out of the woods just yet? Absolutely not, even though trading in the key US market has been better more recently. Still, the long-term outlook here remains extremely bright, and at current prices I think JD Sports could be too cheap to ignore.

I’m expecting the share price to rebound as its global store expansion drive continues on. Once shoppers loosen the purse strings again, I think profits could take off.

Box clever

Fading hopes of interest rate cuts have hit property stocks in recent weeks. For Tritax Big Box, its borrowing costs are likely to be higher than expected at the start of 2026, weighing on earnings.

But largely speaking, the profits picture here is also pretty robust. I don’t think this is reflected in the FTSE 100 share’s low P/E — at 7.7, it’s well below the long-term average of 11-12.

Tritax’s exposure to blue-chip and non-cyclical companies means rent rolls should remain rock-solid whatever economic challenges emerge. Over the long term, I expect earnings to surge as demand for warehouses and data centre booms.

The best value share today?

Right now, ICG (LSE:ICG) is top of my shopping list. Whatever way you cut it, the alternative asset manager offers excellent value for money.

Its forward P/E ratio is just 9.7 times, while its price-to-earnings growth (PEG) ratio is 0.8. It also offers excellent value based on expected dividends as well as earnings — its dividend yield is a chunky 5.7% for 2027.

Finally, ICG’s price-to-book (P/B) ratio is 1.7. That’s above the benchmark of one, meaning the stock’s trading at a premium to its book value. However, this is the lowest level for three-and-a-half years.

ICG — previously known as Intermediate Capital Group — invests money for institutional clients, chiefly in private markets, and charges fees for the privilege. This leaves it vulnerable during tough periods when investment flows cool.

So what makes it an attractive FTSE 100 share to consider today? It’s not just that brilliant value for money we’ve discussed. ICG has proven its ability to successfully navigate challenging periods, as its 16 straight years of dividend increases illustrates.

The post After the FTSE 100’s slump, these bargain shares are calling! appeared first on The Motley Fool UK.

It has repeatedly hit new highs, including so far this year.

But with war in the Middle East, elevated geopolitical concerns, and uncertainty about what international developments may end up meaning for the economy, the FTSE 100 has been heading downwards over the past couple of weeks.

Could this be a sign of worse to come?

UK listed, globally active

The FTSE 100 contains 100 shares listed on the London market. But while it has its fair share of British businesses like Next and Severn Trent, FTSE 100 companies make most of their money overseas.

That reflects the global nature of many of the firms, such as Prudential and Unilever. So, global events can certainly have an impact on the index.

For FTSE 100 companies like oil majors BP and Shell, rising oil prices could actually turn out to be good news.

For other members, though, cost inflation could eat into profits while uncertainty is a threat to customer demand. British Airways owner International Airlines Group is an example.

So it is difficult to form a clear picture of what impact recent events may have on index members’ business performance over time.

But, in general, markets dislike uncertainty. What is also clear is that the current global climate is pushing up some prices, reducing demand in some areas and leading businesses to postpone certain decision processes.

Taken together, that is bad news for the short to medium-term health of the world economy, in my view.

Here’s why I’m a long-term investor!

Fortunately, though, I take a long-term approach to investing.

So, when share prices seem attractive even for a short period of time, I have a buying opportunity. But when the price of a share I own falls below what I think is reasonable for the business, I do not lose any sleep over it.

Over time – even if it takes years – I expect that buying a diversified portfolio of high-quality companies when I can do so for an attractive price will help me to build wealth.

Looking for opportunities in today’s market

That helps explain why I am not too worried about what is happening to the FTSE 100 right now.

It could be that the strong performance of the past several years now becomes a memory and the party ends, with the index continuing to slide.

That would not bother me, though, as over the long run I expect the index to do well – and right now I am looking for individual shares to buy, not an index tracker.

One FTSE 100 share I continue to think investors should consider is JD Sports (LSE: JD), which sells for pennies.

Fragile consumer confidence could hurt demand for pricy sportswear. Higher global shipping costs is also a risk to profitability.

Still, I think the business has a lot going for it. It has a strong brand, large customer base, global footprint, and proven business model.

I reckon the current share price looks cheap from a long-term perspective, at just eight times earnings.

JD Sports has grown substantially in recent years and navigated demand and supply chain risks before. I am optimistic that it has what it takes to keep doing so.

The post Is the party over for the FTSE 100 – or not? appeared first on The Motley Fool UK.

JD Sports Fashion (LSE:JD.), Grainger (LSE:GRI) and TBC Bank (LSE:TBCG) are three that have caught my eye this month. Each comes with an ultra-low price-to-earnings (P/E) ratio. But that’s not all that makes them great value stocks to consider buying.

Here’s why they could be too cheap for investors to ignore.

Fashion and sports star

Retailers like JD Sports face severe challenges as surging oil prices fuel inflationary pressures. But could this be baked into this FTSE 100 share’s current valuation? I think so. Fresh share price weakness leaves the sportswear giant on a forward P/E ratio of 6.5 times.

The good news for JD is key brands like Nike and Adidas are regaining popularity with consumers, latest financials show. Collectively, these top-tier brands make up the lion’s share of company sales. Even if shopper spending power becomes more constrained, their excellent brand power could support strong sales at the retailer.

Longer term, I’m optimistic JD’s profits could soar from today’s levels as global store expansion rolls on. Recent price weakness represents a new dip opportunity to consider.

Top trust

Grainger is one of the most attractive dividend stocks on offer today, in my view. Like all real estate investment trusts (REITs), it has to pay 90% or more of its rental profits out in cash to investors.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

That’s not all. It’s Britain’s largest listed operator in that most defensive of sectors: residential property. So even if economic conditions worsen and inflation bursts higher, rental income should remain broadly stable.

Higher interest rates will likely hit its share price by raising borrowing costs. This could also weigh on its growth prospects by making new housing developments prohibitively expensive. However, those REIT rules mean Grainger should still be a reliable and generous dividend growth stock.

City analysts agree, meaning a huge dividend yield of 5.1% for this financial year (to September 2025). A forward P/E ratio of 8.9 times provides an extra sweetener for value investors.

The best bank?

TBC Bank is one of the hottest growth stocks out there, in my view. Unlike Lloyds, for instance, which operates in a very mature market, this FTSE 250 bank operates in the fertile Georgian marketplace. This is one that offers the stunning combination of low product penetration and surging demand as the local economy booms.

Like other banking stocks, TBC also stands to gain from more favourable interest rates that’ll boost margins. Rising inflationary pressures are feeding expectations that central banks will stop cutting — or perhaps even hike — their lending rates.

I don’t think these factors are reflected in TBC’s low forward P/E ratio of 5.6 times. Growth could be impacted if the National Bank of Georgia raises rates, hurting the domestic economy. But I think the bank’s challenges are more than baked into that low earnings multiple.

One final thing: the dividend here for 2026 is a gigantic 6.5%.

The post These 3 FTSE 100 and FTSE 250 stocks are now dirt cheap! appeared first on The Motley Fool UK.