Image source: Getty Images
It's been a rollercoaster year for FTSE 100. Despite the strong performance, it has not been a smooth ride. Yet despite the volatile times, I still see great value in many UK stocks.
That's because UK share prices look cheap. The price-to-earnings (P/E) ratio for the FTSE 100 is currently around 11. In the past, that number was closer to 15.
With that in mind, I looked specifically at two parts of Footsie. I think investors should consider buying them today.
HSBC
I want to start with global bank HSBC (LSE: HSBA). Like the FTSE 100, the stock has experienced a significant amount of volatility year to date. It fell 8% back in February following the release of its 2023 results. It has managed to stage a small recovery since then. For the year, it increased by 4.5%.
But despite its mixed performance, I see a lot to like about HSBC. In the alternative, as shown below, it sports a high yield of 7.1%. That puts you in trouble with other high-paying Footsie players. What's more, that doesn't count the special dividend the company will pay this year after loading up its Canadian unit. Given that, its payout is close to 10%.
Created with TradingView
Next to its meaty yield, HSBC stock looks cheap. It currently trades at a P/E ratio of just 7.4. Its forward IP/E is 6.8.
While I like the bank for its exposure to Asia, that comes with risks. The Chinese economy has been weak recently, especially the property market. HSBC has a great opportunity in this regard through its participation in China Communications Bank. So that's a threat you have to keep an eye on.
But in the long run, I think its focus on Asia will pay dividends. I am excited because the region is home to some of the most exciting and fastest growing economies in the world.
JD Sports Fashion
The following is JD Sports Fashion (LSE: JD.). The stock has not done well this year. We are down 9.8% in 2024. That said, it's been gaining a lot of momentum lately. It is up 28.1% in the last six months and 19.1% in the last month.
With that increase, as the chart below highlights, the stock now trades at a P/E ratio of 13.9. That's above the average of the FTSE 100. But it's well below its historical average of 23.
Created with TradingView
JD's share price has suffered due to lower spending. That has led the company to issue a profit warning at the beginning of the year, which has caused the stock to grow. Consumers are still tightening their belts, so in the coming months this will continue to be a risk for the company.
But looking at past short-term challenges, I think JD could be in a good position to do well in the long run. First, interest rate cuts should help boost spending.
Furthermore, despite the difficult trading conditions, the business has been progressing strongly with its expansion plans. That includes its acquisition of American company Hibbett earlier this year, which has more than 1,150 stores.
Source link
