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As decent as 2024 has been for the FTSE 100 Index So far, some of its members are having a much tougher time. Today, I'll look at two value stocks now trading at 52-week lows and ask whether they're simply too cheap to ignore.
Fall in profits
It may have benefited greatly from rising gas and electricity prices in recent years, but I think it's fair to say that CentralThe losing streak for 's (LSE: CNA) is definitely over. The stock has fallen 13% in 2024 alone as market conditions have, according to management, ““normalized”Total adjusted operating profit was £1.04 billion in the first six months of the year, double that of the same period in 2023.
It's important to put this drop into perspective. While it's painful for new holders, those who had the courage to buy at the start of the pandemic will still be able to make exceptionally good returns. It can also be argued that there's a lot of built-in negativity now.
Cheap FTSE 100 Index Shares
The £6.3bn capitalisation is trading at a forward price-to-earnings (P/E) ratio of just six. At first glance, it looks very cheap relative to the utilities sector and the wider UK market.
Centrica's finances also look much healthier than before. A huge amount of net cash on the balance sheet should allow it to continue to shift its business towards renewable energy sources. And with fuel prices set to rise next month, perhaps the next set of figures will get a warmer reception.
However, this is still an incredibly competitive space where customer loyalty no longer exists. Anecdotally, I have just switched suppliers, British Gas from Centrica, and saved a lot of money in the process.
Add to this low margins and a history of inconsistent dividends, and I'm in no rush to buy here.
Out of favor
Another FTSE 100 stock that recently hit a new 52-week low is mining giant Rio Tinto (LSE:RIO). Its shares have been falling in value in 2024 (down 22% at the time of writing).
There are probably several interconnected reasons for this. The main one is undoubtedly the slowdown in economic development in China, one of the world's largest importers of metals. Geopolitical tensions and high interest rates have not helped the situation.
Better to buy?
Like its blue-chip peer, this company's stock is now trading at a low P/E of just eight. However, unlike Centrica, that's actually a very average price within its own sector. There's also the possibility that the stock could continue to fall should there be unimpressive production upgrades, in addition to the concerns already mentioned.
All that said, I'm not buying, but I would be more inclined to buy Rio Tinto if I had cash available for two main reasons.
Firstly, its size and interests in metals such as copper and lithium mean that it is likely to play a key role in the green energy revolution. This transition will clearly take decades, but that brings me to my second reason.
It has a projected dividend yield of 7.2%. While no passive income stream can be guaranteed, this is double what you would get from a standard FTSE 100 tracker and could generate a great result if reinvested and allowed to compound.
