I’m currently looking for FTSE 100 shares trading at discounted prices. The UK’s blue-chip benchmark looks poised to break the 8,000 point barrier for the first time. Even so, I think there are a number of value investment opportunities within the ranks of Footsie companies.
Here are three stocks that look cheap to me today.
British American Tobacco
The first FTSE 100 stock on my list is British American Tobacco (LSE:BATS). The share price is down 6% over the last year, and I think now could be a great time for me to buy more shares in the tobacco giant.
Modest full-year earnings results might make this stock a surprise pick. However, digging into the detail, I think there are reasons to be bullish.
Consumers of non-combustible products soared by 4.2m to 22.5m. This is essential as the tobacco business strives to reinvent itself to counter regulatory challenges.
I was also encouraged by 6% growth in the dividend. The company’s a stalwart in my passive income portfolio thanks to a 7.27% yield, which is considerably above the Footsie average.
Admittedly, the unexpected absence of a new share buyback programme and an exit from the Russian market are headwinds impacting growth in the British American Tobacco share price.
Yet, despite the risks, the stock looks oversold to me considering the company remains on target to hit £5bn in revenue by 2025.
Rightmove
Rightmove (LSE:RMV) is the second FTSE 100 stock I’d invest in if I had some spare cash. I believe the online property portal has plenty of upside potential.
A widely anticipated UK house price slump might be bad news for the Rightmove share price. However, I’m not so sure. Rental yields remain strong, and the company makes money from letting agents as well as property sales.
Low debt levels, an 84% market share, and 101% operating cash conversion are all compelling reasons to invest. There’s also a handy 1.4% dividend yield.
Despite near-term headwinds, I’m optimistic about the housing market’s long-term prospects. Fundamental supply issues mean any decline in activity should be short-lived in my view.
Today’s price-to-earnings (P/E) ratio of 26 is below the pre-pandemic level of 30. That suggests a value opportunity.
Rio Tinto
Rio Tinto (LSE:RIO) completes the trio. With some spare cash, I’d buy shares in the FTSE 100 mining company for the huge 8.89% dividend yield, but I think there’s a good chance the share price could rise too.
China’s economic reopening and anticipated stimulus measures to support its ailing real estate sector are key tailwinds for the company.
Rio Tinto’s highly dependent on the iron ore price, which is supported by Chinese infrastructure spending. The country accounts for around 66% of seaborn iron ore demand.
Copper’s another major contributor to Rio Tinto’s revenue. Long-term demand should prove robust as the metal has unique conductive properties that are particularly useful for renewable energy systems and electric vehicles.
In addition, political unrest in Peru is threatening copper supply in the world’s second-largest producer. This could lift the price higher.
A global economic slowdown might hurt the Rio Tinto share price, given the industry’s cyclical nature. That’s a risk I’d take for a market-leading dividend.
