2 cheap FTSE 100 and FTSE 250 shares for growth AND dividends!
I’ve been scouring the FTSE 100 and FTSE 250 for the best value stocks to buy today. Here are two I think are worth serious consideration from growth and income investors.
JD Sports Fashion
JD Sports Fashion‘s (LSE:JD.) suffered from weak retail conditions (particularly in North America) in recent times. But with interest rates falling, City brokers think earnings are about to burst higher again.
A 7% rise is tipped for this financial year to January 2025. This improves to 15% and 16% for fiscal 2026 and 2027 respectively.
I’m not shocked by these bullish projections. They also reflect further rapid growth in the athleisure fashion market, a segment in which JD’s a market leader, as well as the company’s global expansion drive.
These projections mean the retailer, at 123p per share, trades on a price-to-earnings (P/E) ratio of just 9.7 times for this year. This is well below the FTSE 100 average of 14.4. This reading declines to 8.5 and 7.3 times for financial 2026 and 2027 too.
Furthermore, for these two years, JD’s price-to-earnings growth (PEG) falls well below the value watermark of 1. These are 0.6 for next year and 0.5 for the following fiscal period.
On the downside, dividend yields aren’t especially large. However, the prospect of rapid dividend growth still makes JD an appealing income stock for me.
Its 0.7% dividend yield for this year rises to 0.9% and 1.1% in fiscal 2026 and 2027.
Ibstock
A large swathe of UK shares stand to benefit from objectives laid out in this week’s Budget. Infrastructure, renewable energy, defence and healthcare stocks, for instance, might be big beneficiaries.
Housebuilders and building material suppliers could also emerge as winners. The government’s pledged to spend big to meet its pledge to build 300,000 new homes a year. This begins with a £5bn cash injection in 2025 alone, as announced in the Budget.
Brickmaker Ibstock‘s (LSE:IBST) a FTSE 250 company whose profits could soar against this backdrop. It should also receive a boost as repair and maintenance of Britain’s housing stock — reportedly the oldest in the world — continues with gusto.
Ibstock shares don’t look especially cheap for this financial year. At 205p per share, they trade on a P/E ratio of 26.3 times for this year. However, this multiple plummets over the next couple of years as earnings take off, to 19 in 2025 and 14.4 the year after.
City analysts expect earnings per share to rocket 38% and 32% in 2025 and 2026 respectively.
Also, Ibstock’s PEG multiple is just 0.5 for these two years.
These bright forecasts also lead to predictions of strong dividend growth. So the dividend yield on Ibstock shares moves from 2% for this year to 2.7% and 3.5% in 2025 and 2026.
High interest rates remain a threat to the business. But at current prices I think it’s worth close attention, along with JD.
The post 2 cheap FTSE 100 and FTSE 250 shares for growth AND dividends! appeared first on The Motley Fool UK.
Like buying £1 for 31p
This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
More reading
- Best British value stocks to consider buying in November
- Is JD Sports a value share – or value trap?
- Down 13% in a month, is this FTSE 100 favourite in my buy zone?
- After crashing 15% in a month my favourite growth share looks like a no-brainer buy for me
- 2 UK shares I’d be happy to own if the stock market closed for a decade
Royston Wild has positions in Ibstock Plc. The Motley Fool UK has recommended Ibstock 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.
