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After a few difficult months for FTSE 100 I can see a lot of cheap stocks that I would like to buy right now. That's great news because cheap stocks are my favorite type.
The first on the list is Barclays (LSE: BARC). I am surprised to see the bank trading with a price-to-earnings (P/E) ratio of only 9.2. That's well below the FTSE 100 average of 14.2 times.
I expected it to be much more expensive, given that Barclays' share price has soared 79.17% in the last 12 months.
Can the Barclays share price continue to rise?
The big banks have done well this year, but Barclays has the added factor of exposure to the United States through its investment banking arm. Therefore, it can benefit from Trump's deal.
Better yet, it appears to have minimal exposure to the auto financing scandal. This is in stark contrast to its FTSE 100 rival. Lloyds Banking Groupwhose shares have been affected as a result.
Barclays may also benefit from the growing sense that interest rates will stay high for longer. This will allow banks to maintain their net interest margins, the difference between what they pay to savers and what they charge to borrowers.
The business continues to move at full speed. On 24 October, Barclays reported a pre-tax profit of £2.2bn for the third quarter, up from £1.9bn a year earlier.
Banking will always be risky, especially given the current economic and geopolitical concerns, especially in the UK domestic market. Barclays' dividend yield has plummeted to 3.31%, which is a low level. My biggest concern is his actions, my inactivity or even his retirement after his stellar career. Although I still plan to buy it when I have the cash.
OMG, National Grid Stock Looks Cheap
Transmission giant National Network (LSE:NG) It may not look surprisingly cheap with a P/E of 11.76 times, but I was personally surprised. I've gotten used to trading at 15 or 16 times earnings, almost every time I looked. That is exactly the fair value.
I had always attributed its stable valuation to the fact that National Grid is a natural monopoly with regulated profits, so investors pretty much knew what they were getting.
On the other hand, it's been a fun year for National Grid. Its share price plummeted in May after the board announced a £7bn rights issue to support £60bn of capital investment over the next five years. That's not the kind of thing investors expect from this stock. However, it rebounded quite strongly as investors took the opportunity to increase their stake at a discounted price.
It has fallen 3.91% over the last month after the board reported a 50% drop in pre-tax profits (down 50% to £684m on November 7). However, profits rose 26% to £1.43bn on an underlying basis. In 12 months, the National Grid share price is up a modest 5.84%.
The final yield is an excellent 5.8%, providing a solid total return. I confess I am concerned about National Grid's £43.6bn net debt and demands for infrastructure investment. But if I don't buy the stock at today's discounted price, I never will.
