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Nobody likes to pay more for something. The same applies when it comes to the stock market. I hang my head in shame when I see a stock I overlooked months ago skyrocket in value. With this in mind, here are two FTSE 100 stocks that I think are a good value now, but won't remain that way forever.
Sneaking under the radar
Sainsbury's (LSE:SBRY) is one of the largest supermarkets in the United Kingdom. The share price is down 4% over the past year and is currently languishing near 52-week lows.
The company shared a strategy update earlier this month that really caught my attention. It shows the progress that the firm has made in recent years. For example, in the 2019/20 financial year it recorded an underlying pre-tax profit of £586m. By 2023/34 this is expected to be £670/700 million.
There has also been progress in reducing net debt. Debt (excluding leases) stood at £1.1bn in 2019/20. It is expected to be around £200m for the current financial year.
However, despite these fundamental benefits, the share price isn't really moving. Of course, this isn't a problem for income investors, who are earning a 5.16% dividend yield. But I think it's only a matter of time before the stock starts to rise to target levels above 300p.
Of course, there is a risk that the company operates in a cutthroat sector. Aggressive competitors and tight profit margins mean no business is safe in this retail space.
Waiting for a rebound
The other undervalued stock I'm thinking of buying is Kingfisher (LSE:KGF). The owner of Screwfix and B&Q experienced a boom period during the pandemic. However, following rapidly rising interest rates, people have put DIY projects on hold (or haven't needed to work on new homes because they couldn't afford to buy them!).
I think this is reflected in the 21% drop in the share price over the last year. Given this, I think the stock is cheap. Interest rates will not stay above 5% forever. In fact, we could see a rate cut as early as May. As pressure eases and consumers become more comfortable spending, I would expect demand for tools and related products to increase again.
Although gains haven't been spectacular lately, the stock price appears to have fallen faster than it should. This is reflected in the price-earnings ratio falling to 7.49. Below 10 is where I point out that a company is potentially undervalued. I feel this is the case with Kingfisher.
Of course, any housing market recovery and change in interest rates could take longer than expected. This is a risk I need to consider as it would affect the stock price.
I see value in both stocks in the long term and therefore want to buy when I have some extra funds.
