Is this hot bargain one of the FTSE 100’s best stocks to buy?
The FTSE 100‘s rallying right now, but there are still lots of top bargain stocks for investors to buy. Some still look cheap, even though they’ve joined in the stock market rally. Others have fallen by the wayside, but remain top shares to consider for a price recovery.
Barratt Redrow (LSE:BTRW) is one brilliantly cheap share I think’s worth serious attention. Want to know why?
Cheap as chips
Barratt Redrow’s share price has risen in early 2026, but is failing to keep pace with the broader FTSE 100. The housebuilder’s up 1% since 1 January, below the blue-chip index’s 4% increase. As a result, it still looks dirt cheap across a number of metrics.
First, let’s look at expected earnings. City analysts think Barratt’s bottom line will surge 99% this financial year (to June 2026). And so it trades on a forward price-to-earnings-to-growth (PEG) ratio of 0.1.
Any reading below 1 indicates a stock trading below value. And the good news doesn’t end there, either. The builder’s PEG remains rock bottom at 0.4 for financial 2027, when earnings are expected to rise 26% year on year.
It’s important to consider how realistic these profits forecasts are, of course, when looking at price-to-earnings (P/E) and PEG ratios. But recent news flow suggests Barratt’s in good shape to hit these targets.
Great news
As Britain’s biggest housebuilder, Barratt is well placed to capitalise on any housing market upturn. This year it’s aiming to put up 17,200 to 17,800 new homes, up from 16,565 in fiscal 2025.
Judging from recent data, I expect construction targets to rise as planned and keep increasing, allowing it to continue growing profits.
FTSE 250 housebuilder Bellway boosted my confidence in a market rebound with a fresh trading statement on Tuesday (10 February). It pointed to “clear signs of improving customer demand in the early weeks of the current spring selling season” after a subdued autumn, adding that “we have been encouraged by a pick-up in both reservation rates and leads for our sales teams“.
Despite the tough autumn, Bellway’s completion levels rose to 4,702 homes in the six months to January from 4,577 a year earlier. Average selling prices also increased to £322,000 from £310,581.
This tallies with market experts’ predictions of recovering housing demand in 2026. Building society Halifax has tipped average home price growth of 1% to 3% this year. Nationwide predicts a higher growth rate, of 2% to 4%.
A top recovery stock to buy?
There are risks to these forecasts, of course. Interest rates are falling and the mortgage market’s become increasingly competitive, which should support buyer affordability. However, demand for new homes could still disappoint if the UK economy remains weak.
Yet I believe these dangers are more than baked into Barratt Redrow’s share price today. Along with that sub-1 PEG ratio, the company’s price-to-book (P/B) multiple is 0.7.
That’s below the long-term average of 1.1, and shows the builder trading at a discount to its asset values.
On balance, I think Barratt could be one of the FTSE 100’s best recovery stocks to buy at current prices. While risks remain, I’m confident its share price will rise strongly from today’s levels once the housing market bounces back.
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Royston Wild has positions in Barratt Redrow. The Motley Fool UK has recommended Barratt Redrow. 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.
