2 dirt cheap FTSE 100 stocks I’d buy in May

2 dirt cheap FTSE 100 stocks I’d buy in May

British bank notes and coins

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There seems to be no stopping the FTSE 100 as demand for value stocks heats up. At 8,354 points, the UK’s premier share index is up 8% since the start of 2024. It’s also printed several new record highs in this time.

Investor concerns over Britain’s economic prospects and political landscape have dented demand for blue-chip shares in recent years.

This has led to talk more recently that FTSE 100 shares are massively undervalued, and driven the fresh rush for UK shares.

But it’ll take longer than a few weeks of gains before analysts and market commentators change their view on the matter.

Research from my Foolish colleague Zaven Boyrazian as recently as February suggested that FTSE stocks trade a whopping 33.7% below value! So the index’s bull run could have much further to go.

2 brilliant bargain stocks

With this in mind, here are two of my favourite blue-chip value stocks to buy today. Here’s why I’d buy them if I had spare cash to invest right now.

At £27 a share, Associated British Foods (LSE:ABF) trades on a forward price-to-earnings growth (PEG) ratio of 0.4.

A reading indicates below 1 indicates a share is undervalued relative to its growth prospects. As you can see, the Primark owner trades well below this value threshold. It looks especially cheap considering the strength of recent trading.

Sales across its retail, ingredients and food divisions remain red hot. At Primark, revenues rose 7.5% in the 24 weeks to March 2, a result that prompted the company to raise its full-year profits forecasts.

Demand for low-cost fashion continues to grow. And ABF’s plans to capitalise on this through global expansion is paying off handsomely.

It opened nine new stores in the period to March 2 to take the worldwide total to 440. On top of this, the business is investing heavily in e-commerce across its markets to give sales another real boost.

Rising costs remain a threat across the business. But on balance, there’s a lot for investors to be excited about with this Footsie share.

8.6% dividend yield

Trading at 248p, Legal & General Group (LSE:LGEN) shares also look dirt cheap when it comes to earnings and dividend forecasts.

Today, its price-to-earnings (P/E) ratio for 2024 stands at 10.1 times. On top of this, its corresponding PEG ratio is below 0.1, even lower than that of ABF.

Finally, the dividend yield on Legal & General comes in at 8.6%.

I don’t think these figures reflect the financial services giant’s exceptional growth potential. I expect demand for its wealth, pensions and retirement products to rise strongly as the number of older people in its markets balloon.

On the downside, Legal & General faces significant competitive threats. But market-leading positions in multiple product categories (like life insurance and workplace pensions) shows it knows what it takes to succeed.

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