These FTSE 100 stars are STILL way, way too cheap!
Royal Mail (LSE:RMG) may have recovered from the lows plumbed in the wake of June's Brexit decision. But the courier still deals at a 5% discount to levels seen before the results were announced on that infamous Friday morning.
By comparison, the FTSE 100(INDEXFTSE: UKX) has steamed higher following initial weakness, rising 8% since the referendum and coming within a hair's breadth of 7,000 points. But I believe this vast gap between the two performances is hard to justify.
Sure, Royal Mail may not have the huge geographical spread of many of its blue chip peers. But I believe parcel levels should remain broadly robust looking ahead, even if consumer spending power takes a hit in the post-EU landscape, with retailers likely to take the brunt through massive discounting in a bid to maintain volumes.
Besides, Britain's oldest courier has overseas operations of its own to help take the sting out of operational difficulties at home. Royal Mail's pan-European GLS division -- although responsible for just a fifth of group sales at present -- continues to grow at a terrific rate, and both revenues and volumes here shot 13% higher during April-June.
While Royal Mail isn't without its risks, I believe a forward P/E ratio of 12.5 times -- far below the FTSE 100 average of 15 times -- makes the parcels play a highly-attractive stock for value seekers. And a 4.4% dividend yield for the current fiscal year seals the investment case, in my opinion.
Cement a fortune
Like Royal Mail, housebuilding play Taylor Wimpey(LSE: TW) has also witnessed a massive divergence between its own share price and those of its big-cap rivals since the UK's decision to eject itself from the European Union.
The construction colossus has seen its value crash 17% since the vote, and recent evidence suggests that some investor caution is warranted. Mid-week data from Halifax showed British home prices rose 0.7% in the three months to August, the lowest quarterly rise since late 2014.
But despite the possibility of sales hiccups in the months ahead, I'm convinced that the long-term outlook for the housing sector remains robust given the vast chasm between supply and demand.
Just today Barratt Developments chairman John Allan said that "we remain confident in the strong fundamentals of the housing sector and our business," noting that "the wider market for new homes remains healthy across Britain, with a long-term undersupply of new homes, strong government support to the sector and a liquid mortgage market."
Recent share price weakness leaves Taylor Wimpey dealing on an ultra-low P/E ratio of 9.4 times, falling inside the bargain-basement standard of 10 times or below. And the business carries a market-busting 7% dividend yield.
I believe this makes the homebuilder an irresistible stock at the present time, particularly as the firm's growth outlook for the coming years remains broadly intact.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
