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The recent bond market sell-off is hitting the markets – the FTSE 100 just suffered its worst single-day fall since May. Value investors will know that any turbulence could mean many a bargain on offer. That seems doubly true considering there are no less than 15 Footsie stocks now trading at a single-digit price-to-earnings (P/E) ratio.
Let’s take a look at three that have caught my eye, sporting P/E ratios of 8.79, 8.15 and 7.15.
Undervalued?
First up, ‘blue eagle’ bank Barclays. The FTSE 100 stock trades at 8.79 times earnings, which looks potentially undervalued to me. Bear in mind, this is a stock that’s risen 195% since 2024.
Why so cheap? Well, valuations across the sector have been depressed since the disasters of 2008. And would-be investors may wish to tread cautiously in case of a possible repeat of a similar crisis.
An even cheaper-looking stock is JD Sports, trading at 7.15 times earnings. With the share price down 65% since 2021, a natural question to ask is whether there’s a serious bargain on offer here.
I’m sceptical. Fashion-linked stocks tend to go in and out of… fashion (so to speak). And it’s possible the athleisure trend that propelled the retailer higher is stuttering a touch.
There’s the cost-of-living crisis to think about too. Much of its customer base is composed of younger folk who aren’t exactly flush with disposable cash these days.
A buy?
A third possibly underpriced stock I wanted to highlight is International Consolidated Airlines (LSE: IAG). The group’s better known by its airlines British Airways, Aer Lingus and Vueling. It has a P/E ratio of 8.15.
Is that cheap? Judging by the other FTSE 100 airline stock, the answer is ‘probably’. I opened a position in easyJet earlier this year when it was trading at a P/E of six or so – thinking it was mispriced from concern about flight disruption in the aftermath of the pandemic. Not three months later, a bidding war from companies erupted and a deal was made with a hefty premium on the share price (in the region of 80% at least).
IAG’s a different beast, in fairness. The company operates at the higher end of the market, attracting more premium and business customers. This can protect earnings during a cost-of-living crisis, which will hurt budget airlines more. But more long-haul flights means conflict in a long-distance travel hub – like, say, the Middle East – can be a rather large problem.
It’s worth mentioning that the rebound from the pandemic is already in full swing. The share price is up 150% since 2024. And with an attractive valuation, I wouldn’t be surprised to see further gains in the years ahead. I think IAG’s worth a look.
Should you invest £5,000 in International Consolidated Airlines Group right now?
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John Fieldsend owns shares in Barclays and easyJet.
This story originally appeared on Motley Fool
