Two FTSE 100 stocks I'd buy on the next dip

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Taylor Wimpey, Eden Grange.

The steady share price ascent over at Taylor Wimpey(LSE: TW) since the turn of the year comes as little surprise to me.

The housebuilding giant has now erased all of the losses endured since the post-referendum sell-off in June, investors initially selling off Taylor Wimpey and its peers as fears over homebuyer demand in a Brexit landscape exploded.

But a sudden collapse in home values was never likely to be on the cards, even in spite of the assertions of then-Chancellor of the Exchequer George Osborne. Indeed, a backcloth of ultra-low interest rates has kept home sales ticking over nicely, and this environment is likely to persist now Article 50 has been triggered and the Bank of England takes the necessary measures to support the British economy.

Taylor Wimpey indeed commented just last month that "customer interest remains high, with website visits solid and customers continuing to register interest in forthcoming developments and progress their home purchase plans."

It would be wrong of course to suggest that Brexit has had no impact on buyer demand, and this is being reflected in house price data being less impressive than in prior years. This could continue in the aftermath of EU withdrawal being officially triggered this week, and consequently put the share prices of Taylor Wimpey and its peers under fresh pressure.

But while value investors may be tempted to wait for the next share value dip before piling-in, I believe Taylor Wimpey provides exceptional upside even at current prices.

For 2017 and 2018 the construction play is anticipated to generate earnings growth of 6% and 4% respectively, resulting in mega-low P/E ratios of 9.9 times and 9.5 times. And dividend chasers should be delighted with dividend yields of 7.2% and 7.7% for this year and next.

I reckon Taylor Wimpey remains in great shape to keep delivering brilliant shareholder returns, a combination of solid demand and inadequate supply likely to keep house values shooting higher.

Weapons grade winner

Security specialist BAE Systems (LSE: BA) has also seen its share price continue to rise in recent weeks, a combination of safe-haven shopping for defence sector stocks and an increasingly-shaky geopolitical outlook driving investor demand.

New missile tests from North Korea and Iran have again raised concerns over global security, a situation that is likely to harden President Trump's resolve to rebuild the country's military. But state-sponsored action is not the only factor that could drive demand for BAE Systems' high-tech goods higher in the years ahead as the recent terrorist attack on Westminster Bridge underlined.

This view is shared by the Square Mile, and the number crunchers expect BAE Systems to punch a 9% earnings rise in 2017 and a 7% increase next year, figures that result in P/E ratios of 14.8 times and 13.8 times, just below the FTSE 100 forward average.

Meanwhile, dividend yields register at 3.4% and 3.5% for 2017 and 2018 respectively.

Unlike Taylor Wimpey, BAE Systems clearly doesn't offer obviously-electric value for money -- at least on paper -- and bargain chasers may well be tempted elsewhere.

Still, I reckon all shrewd investors should consider stocking up on the arms colossus should BAE Systems' stock price retreat from recent record highs.

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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. 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.