The FTSE 100 is at record highs, but these stocks still look cheap to me

With the FTSE 100 trading close to record highs, some of the UK’s largest companies are starting to look quite expensive to me.

As a long-term investor, I’m looking for stocks with the potential to beat the market over long periods. For me, that sometimes means following Warren Buffett’s example and buying shares in good businesses that are temporarily out of fashion.

I reckon I’ve found two FTSE 100 stocks that could fit the bill perfectly.

Quality at a bargain price?

Sports fashion footwear retailer JD Sports Fashion (LSE: JD.) has seen its share price halve over the last two years. But the group’s profits have risen over the same period. I think there’s a real chance the shares are now simply too cheap.

Since its flotation on the London Stock Exchange in 1996, JD Sports has built a fearsome reputation for growth through both store openings and acquisitions. The group now has more than 3,300 stores worldwide, largely split across the UK, Europe, and US.

Growth stumbled in 2021 when the pandemic hit store sales and the share price hasn’t yet recovered. However, the group’s business has continued to grow.

Sales rose by 10% to £11.5bn during the year to 1 February 2025. While adjusted pre-tax profit fell by 4% to £923m due to rising costs, the business still generated an attractive 18% return on equity.

Some investors worry that JD Sports will lose market share as key brands such as Nike focus on selling direct to consumers. I can’t rule out that risk. But with the shares trading on just six times 2025/26 forecast earnings, I reckon the shares are already priced for bad news.

Analysts have an average price target of 114p on JD Sports shares – 50% above the share price at the time of writing.

I think this could be a good time to consider investing. I already have enough exposure to UK retail in my portfolio. But if I didn’t, JD Sports is definitely a stock I’d consider.

A high-class operator

Bunzl (LSE: BNZL) is a company I’ve admired for much of my time as an investor. This global business supplies millions of boring-but-essential items such as cleaning products and food packaging to customers all over the world.

Bunzl shares have often looked expensive to me, and I’ve somehow never invested. But that situation may have changed, after the company issued a rare profit warning in April.

Management blamed the downgrade on softer demand in North America and problems rolling out a range of own-branded products. Bunzl’s share price is now a third lower than it was at the start of the year, but I think the shares may now have fallen too far.

This stock is now trading on just 13 times forecast earnings, with a 3.2% dividend yield. These figures are unusually cheap for Bunzl. My research suggests the last time the business traded at this valuation was in 2011.

My main concern is that the problems highlighted in April may take longer to solve than expected. To offset this risk, I might invest in stages, opening a small position initially.

However, Bunzl is actively on my radar as a stock to consider buying when I next have funds available to start a new position.

The post The FTSE 100 is at record highs, but these stocks still look cheap to me appeared first on The Motley Fool UK.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl Plc and Nike. 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.