I think these FTSE 100 heroes could be among the best value shares to buy right now. How so? Well, both trade on rock-bottom earnings multiples and carry market-beating dividend yields.
Here’s why I’d buy them for my own portfolio if I had £5,000 to invest.
Electricity generator SSE’s (LSE: SSE) share price has tanked 20% over the past month. This has pumped its forward dividend yield up to 6.4% and cut its forward price-to-earnings growth (PEG) ratio to just 0.4
A stock is considered undervalued if its reading is below 1.
Worries over a multi-billion-pound windfall tax continue to weigh on the FTSE 100 business. Reports abound that the government is set to cap revenues on renewable energy companies and nuclear power generators, despite denials.
But I strongly believe that green energy producer SSE remains a top stock for long-term investors. It should deliver exceptional profits growth as the fight against climate change intensifies. Renewable energy capacity on these shores rose 6.5% year on year in the second quarter and is now six times higher than it was in 2010.
SSE is accelerating investment in low carbon to capitalise on soaring demand. It’s currently seeking to increase its own renewable energy output fivefold through to the end of the decade.
I also think buying the business is a great idea as electricity consumption steadily rises. Population growth and the transition towards net zero will drive this.
Analysts at McKinsey & Company have tipped electricity demand in Britain to soar 50% between now and 2035. They say this will be driven by “a shift from fossil fuels to electricity as the primary fuel in the transport and building sectors.”
B&M European Value Retail
The UK’s low-cost retail sector continues to grow rapidly. It’s a phenomenon that has propelled Aldi to become the country’s fourth-largest supermarket chain.
I think B&M European Value Retail (LSE: BME) is one of the best shares to buy to capitalise on this hot growth market.
Shoppers are becoming savvier with their cash and expecting more for their pennies. It’s why revenues at this FTSE 100 stock — supported by the company’s store expansion programme — have risen around 50% over the past five years.
And its why City analysts expect the business to keep growing sales over the next couple of years. B&M’s growing store estate is putting it in a strong position to grab customers from its more expensive rivals.
In June, there were 705 B&M-branded stores, up from 684 a year earlier. The number of cut-price Heron Foods grocery stores rose by three over the period, to 311.
Worries about soaring costs have driven the company’s share price 17% lower in the past month. This, in my opinion, represents a great dip-buying opportunity.
B&M trades on a forward price-to-earnings (P/E) ratio of 8.6 times. At 5.2%, its corresponding dividend yield is also impressive.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.