As the summer heats up, so does the demand for FTSE 100 stocks. The premier UK share index has reached new all-time highs above 8,300 points, with gains of 8% in 2024. However, not all blue-chip shares are equally sought after, with many remaining undervalued despite years of underperformance.
Aviva
Among these undervalued gems is Aviva, trading at 496p per share. A glance at the numbers reveals the potential waiting to be unlocked:
- Forward P/E: 10.7 times, on par with the FTSE 100 average
- PEG Ratio: A rock-bottom 0.5, indicating undervaluation relative to predicted profits
- Forward Yield: An impressive 7.1%, double the Footsie average of 3.5%
While concerns about interest rates and market competition linger, Aviva’s strengths shine through. A strong brand and solid balance sheet position the company for growth, especially in pensions and retirement products. City analysts concur, setting a 12-month target of 528.4p, a 7% potential upside.
Vodafone Group
Telecom stocks like Vodafone Group (LSE:VOD) come with inherent risks tied to infrastructure spending. Despite a dividend cut this year for 5G expansion, the long-term potential remains compelling:
- With exposure to Africa’s growing wealth and population, Vodafone stands to benefit from surging demand
- Organic service revenue growth of 9.2% in Africa underscores its growth potential
Trading at 73.5p, Vodafone presents an attractive opportunity:
- Forward P/E: Aligned with the FTSE average
- Dividend Yield: A substantial 6.9%, even after accounting for the upcoming cut
- Price-to-Book Ratio: Below 0.4, indicating a discount to asset value
Analysts see significant upside, with a consensus target price of 96.2p, implying a 31% increase in value over the next year.
In a market brimming with possibilities, Aviva and Vodafone stand out as promising choices for investors seeking undervalued stocks with growth potential.
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