2 insanely cheap FTSE 100 shares to consider buying today!
The FTSE 100 index of elite UK shares is just off record highs, but there are still bargains out there. I’m talking about companies with rock-bottom price-to-earnings (P/E) ratios, and more specifically companies with multiples around 10 times or below.
Want to see what I’ve found? Read on to find two FTSE heroes I think could be too cheap for investors to ignore.
Home comforts
Risks are growing for Berkeley Group (LSE:BKG) as conflict in the Middle East intensifies. Leaping oil prices are fuelling inflationary pressures, and with them hopes of interest rate cuts. A much-expected reduction in Bank of England (BoE) lending rates this month may now have been kicked into the long grass.
Higher interest rates are extremely damaging to home sales by crimping buyer affordability. But could this be baked into Berkeley’s cut-price valuation? I think so. The housebuilder trades on a trailing P/E ratio of 10.6 times.
Over the long term, I remain convinced this FTSE 100 stock retains excellent investment potential. This is thanks to its focus on London and the South East, where severe market undersupply is supporting prices. Real estate services specialist Savills predicts average property values in the capital will rise roughly 14% between now and 2030.
As I say, the interest rate outlook is more uncertain now than it was just a week ago. But on the whole, the broader picture regarding borrowers remains encouraging for Berkeley and its rivals. The BoE is likely to keep cutting rates to kickstart the UK economy when it can. Buyers should also being helped by a fierce mortgage rate war that’s steadily intensifying as challenger banks move in. That’s despite some mortgage rate rises last week in response to the Iran situation.
With the British population rapidly growing, I expect Berkeley’s profits to grow strongly between now and the end of the decade. I feel now represents a good time to consider buying.
What about The Pru?
Berkeley’s share price is up 9% over the last 12 months. That’s not a bad return, but Prudential (LSE:PRU) has blown it out of the water. Its share price is up a whopping 42% since last year.
Yet I believe it still offers excellent value and is worth considering. Its trailing P/E ratio is 10.7.
So why are The Pru’s shares trading so cheaply? It’s safe to say jitters remain over the health of the key Chinese recovery. Last week Beijing predicted its slowest rate of annual growth since the early 1990s for this year. The Middle East crisis hasn’t helped things either.
Investors shouldn’t write off these risks, but Prudential’s long record of resilience soothes any nerves I have as a shareholder. New business profit continues to beat expectations, up 10% in January to September according to latest financials. I’m optimistic earnings can keep rising as demographic factors drives broader financial services demand and Prudential pivots towards higher-margin products.
Given low product uptake in its emerging markets, I think Prudential has incredible growth potential over the next decade. Statista expects Asian life insurance premiums to grow 5.3% a year between now and 2035.
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Royston Wild has positions in Prudential Plc. The Motley Fool UK has recommended Prudential Plc. 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.
