Forget BT! This FTSE 100 stock is a steal at twice the price!

BT (LSE: BT.A) shares have been on a remarkable upward trajectory, soaring from £1 in April to 149p today. While they still seem attractively priced, there are other FTSE 100 stocks that I find more compelling.

Cheap for a reason?
- The current price-to-earnings (P/E) ratio for BT stands at a modest eight, well below the market average, indicating good value. However, the lack of growth in both revenue and earnings per share presents a challenging outlook. Additionally, the substantial debt burden dampens investor sentiment as highly-leveraged companies often come with increased risks.
Factors to consider
- Despite the current challenges, CEO Allison Kirkby’s ambitious plan to double free cash flow over the next five years could potentially drive share prices higher. The attractive dividend yield, currently at 5.4%, might also entice investors if interest rates continue to decline. Yet, with a return on capital hovering around 6%, it raises doubts about the stock’s long-term performance.

If I were to increase my FTSE 100 exposure, a stock that stands out to me ahead of BT is Coca Cola HBC (LSE: CCH), the primary bottling partner for Coca-Cola.

A Compelling Alternative
- Coca Cola HBC offers more attractive fundamentals compared to BT, with healthy revenue growth expectations and a manageable debt profile. The return on capital of about 13% reflects stronger profitability than what BT currently exhibits. Furthermore, the company boasts a solid dividend track record with a growing payout, sustaining a yield of approximately 3.1%, expected to rise to 3.4%.
Valuation and Prospects
- With a P/E ratio of 13.4 based on the 2025 earnings forecast, I see room for multiple expansion, with analysts at Deutsche Bank recently raising their price target to 3,150p. Though facing risks from geopolitical tensions and consumer boycotts of US brands, the overall outlook for Coca Cola HBC appears promising, making it a more compelling investment option than BT.

In conclusion, while BT may offer value at its current price, the growth potential and stronger fundamentals of Coca Cola HBC present a more enticing opportunity for investors. Consider your investment choices carefully and weigh the risks and rewards before making a decision.