These FTSE 100 shares are simply too cheap to miss

Tui cruise ships
Tui cruise ships

In its last trading update, the world's largest travel and tourism company TUI Group(LSE: TUI) said that its 2016 summer season had all but sold out, with winter 2016/17 so far trading in line with expectations. Full-year results for the year ended 30 September aren't due until next month, but the FTSE 100 firm is confident of delivering between 12% and 13% growth in underlying earnings.


Political unrest

I'm pleasantly surprised by these figures, especially considering the fact that many would-be travellers have been deterred by political unrest and terrorism fears in popular destinations like Turkey and North Africa. The group also revealed that it had launched two additional cruise ships and opened five more hotels during the summer, with further additions announced for future seasons. It's reassuring to know that the world's largest travel company isn't resting on its laurels.

It was also encouraging to see a strong performance from the UK during the summer, with revenue and bookings up 5% on the previous year. So far, the winter season is trading in line with expectations, with overall revenue up 11% and bookings up 5%, driven by strong growth in UK long haul travel, which in turn makes for an earlier booking profile.

Still a bargain

In September TUI announced the completion of its disposal of the Hotelbeds Group for EUR1.19bn which was originally announced back in April. In case you're wondering, management won't be using the proceeds to go on holiday, but rather use the funds to invest in the expansion of growth segment hotels as well boosting the balance sheet.

TUI's shares took a dive following the EU referendum back in June, as spooked investors offloaded travel stocks in favour of more defensive sectors. But the share price has since recovered, and in my view this is in no small part due to the company's generous dividend payouts, which at today's levels equate to a chunky 5.3% yield. I believe TUI is still a bargain trading at just 11 times earnings for the year to September 2017, and that's definitely something for travellers to write home about.

Good visibility

Another blue chip company currently trading on a very tempting valuation is Babcock International Group(LSE: BAB). The London-based firm is the UK's leading engineering support services organisation, providing complex and critical support to the defence, energy, emergency services, transport and education sectors. The group has a proven track record of revenue and earnings growth stretching back to 2002. Interestingly that was the year it was reclassified from Engineering to Support Services on the London Stock Exchange.

What I particularly like about Babcock is its strong order book, currently worth around £20bn, with the size of its projects providing a good level of visibility for the future. Around 85% of revenue is now in place for the current financial year to the end of March, with 56% already in place for fiscal 2018. Babcock's shares are currently trading at 969p, well below 2014 highs of 1,417p, leaving the price-to-earnings ratio at a lowly 11 for 2017/18. Bargain hunters might want to take a closer look.

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Bilaal Mohamed 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.