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2 Very Cheap UK Stocks to Consider Buying as the FTSE 100 Hits New All-Time Highs

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THE FTSE100 the index is experiencing excellent performance at the moment. Thanks to the strength of energy and banking stocks, the price reached new all-time highs.

The good news for value lovers is that there are still plenty of cheap stocks within the index. Here’s a look at two stocks I think investors should consider buying today.

50% off its pre-Covid highs

One Footsie company that seems like a good deal to me right now is a healthcare company. Smith and nephew (LSE: SN.), specializing in joint replacement technology.

Pre-Covid, this stock was trading at almost £20. Today, however, it can be purchased for around £10. At this stock price, the company’s price-to-earnings (P/E) ratio is just 12.6, falling to 10.7 based on next year’s earnings forecast.

For a healthcare company that’s generating solid growth (revenue grew 7% last year) and appears well-positioned to benefit from an aging population over the next decade, it’s in my opinion opinion of a very attractive valuation. To put this multiple into perspective, its American rival Stryker currently has a P/E ratio of around 27.

As a shareholder of Smith & Nephew, one of the risks I monitor is the threat of GLP-1 weight loss drugs being developed by companies like Elie Lilly And Novo Nordisk. I don’t think they’re going to blow up Smith & Nephew’s business, but they do add some uncertainty.

I was, however, encouraged by a trading update from Smith & Nephew earlier this month. Not only did the company say it expects revenue growth of 5% to 6% this year, but it also said it expects profit margins to increase slightly year-over-year. other.

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I think another Footsie stock that currently offers a lot of value is Insurer. Prudential (LSE: PRU), which these days focuses on Asia and Africa.

This stock has become an absolute dog of late. And it’s not hard to understand why.

Like many other companies heavily exposed to China (Nike, Estee Lauder, Starbucksetc.), it suffered from the country’s enormous economic slowdown.

For example, a recent trading update showed that annual premium equivalent (APE) sales for CITIC Prudential Life, its joint venture in mainland China, were down 17% year-on-year in the first quarter.

The overall first quarter results weren’t great, however. Over the period, APE’s total sales increased by 7% while profit from new business increased by 11%, driven by strong performance in countries including Thailand, Taiwan and India.

This leads me to believe that when economic conditions in China improve, Prudential’s profits – and the stock price – could increase. It is worth noting that there are signs that China may already be on the rise. For the first quarter, GDP growth stood at 5.3%, well above forecasts.

Right now, Prudential shares are trading with a P/E ratio of just 9.4. I see a lot of value in this earnings multiple.

That said, if economic conditions in China deteriorate, the stock could continue to underperform.

The article 2 Very Cheap UK Stocks to Consider Buying as FTSE 100 Hits New All-Time Highs appeared first on The Motley Fool UK.

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Edward Sheldon holds positions at Estée Lauder Companies, Nike, Novo Nordisk, Prudential Plc and Smith & Nephew Plc. The Motley Fool UK recommended Novo Nordisk, Prudential Plc and Smith & Nephew Plc. The opinions expressed about companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a broad range of information makes us better investors.

Motley Fool UK 2024