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As traders, all of us have a shared want to attempt to keep away from overvalued corporations and ideally purchase low cost FTSE 100 shares. In principle, over time, undervalued shares ought to admire again to truthful worth, yielding a revenue for many who purchased cheaply. Utilizing a preferred metric, listed here are two of the present least expensive choices.
A fallen angel
I’m referring to the price-to-earnings (P/E) ratio. This can be a widespread gauge used to assign a price to an organization, primarily based on the present share worth relative to the most recent earnings per share. A decrease worth usually signifies the agency is undervalued, although the choice to purchase shouldn’t be primarily based solely on this quantity. I take advantage of a determine of 10 as a benchmark for comparability.
The primary firm is WPP (LSE:WPP). This can be a controversial alternative, on condition that the share worth has fallen by 60% within the final 12 months. A significant driver of this has been a number of cuts to its gross sales and revenue outlooks all through 2025. This has been blamed on purchasers tightening advertising and marketing budgets and decreasing discretionary advert spend. This stays a danger going ahead.
Nonetheless, I really feel the inventory has fallen to a degree the place it does now look very low cost, with a P/E ratio of 6.50. There are a number of the explanation why we may see a bounce again in 2026.
It’s investing closely in AI-driven instruments and knowledge platforms. This might repay large time if purchasers start to shift again to companies that may supply superior insights. Additional, a big turnaround plan is simply beginning to kick in, after new CEO Cindy Rose took the helm in September. Over the following six months or so, indicators of progress ought to grow to be extra obvious.
Turning on the engines
One other inventory is easyJet (LSE:EZJ). The share worth is down 11% during the last 12 months, with a P/E ratio of seven.67.
Regardless of a really robust annual set of outcomes launched in November, there have been some contributing elements to the underperformance this 12 months. For instance, the income per out there seat kilometre (RASK) fell 3% versus final 12 months. I learn a observe from analysts at JP Morgan at the beginning of the month flagging that the enterprise is dealing with pricing strain on fares in a extremely aggressive short-haul market.
Regardless that these are dangers that must be carefully watched, I feel the market is just too pessimistic about easyJet. The headline EBIT for the 2025 fiscal 12 months was £703m, up 18% from 2024. It’s additionally turning into extra diversified within the income break up from completely different areas. For instance, the bump in revenue was fairly evenly break up between the airline operations and the vacations division. This could bode nicely going ahead.
I additionally suppose some traders are nonetheless involved about what occurred in the course of the pandemic. It was certainly a troublesome time for the corporate. However this was a black swan occasion. EasyJet has rebounded very strongly and is arguably in a greater place now than it was earlier than the pandemic hit. Subsequently, as individuals grow to be extra snug with the concept that one other pandemic in all probability isn’t across the nook, the easyJet share worth ought to transfer increased once more.
I consider each shares are good worth proper now and could possibly be thought of by traders.
