I think these two FTSE 100 shares could be too cheap for me to miss. Here’s why I’d buy them today.
A top e-commerce stock
Packaging producers like Mondi (LSE: MNDI) are facing mounting bottom-line pressure as paper costs rise. So far this particular FTSE 100 operator has been hugely successful in passing these costs onto customers. But whether or not it can continue to do so without demand falling sharply isn’t guaranteed.
I think this danger could be baked into Mondi’s share price at current levels, however. City analysts currently expect earnings at the business to soar 17% year-on-year in 2022. This leaves it trading on a price-to-earnings growth (PEG) ratio of 0.8, below the bargain benchmark of 1.
I’d buy Mondi because I expect sales of its product to continue soaring as online shopping steadily grows. Analysts at data specialist Smithers think the global packaging market will be worth $1.1trn by 2024. That’s up from the $971bn it was estimated at in 2019. I’m confident Mondi’s drive to increase its range of sustainable packaging products will allow it to win more of this business too.
One more FTSE 100 bargain
I think that ITV’s (LSE: ITV) share price could offer even better value for money today. Analysts expect Britain’s biggest commercial broadcaster to record zero earnings growth in 2022. Yet this still leaves the stock trading on a forward price-to-earnings (P/E) ratio of 7.9 times. Meanwhile ITV also sports a mighty 5.3% dividend yield.
It’s my belief that profits forecasts here might steadily be upgraded as the year progresses, leading to hefty share price gains. The advertising market — which is the lifeblood of commercial broadcasters like ITV — has continued rebounding much more strongly than estimates suggested. A continuation of this trend could well see the FTSE 100 firm follow 2021’s anticipated profits boom.
From a long-term perspective I like ITV because of the huge amounts it’s spending to make its ITV Studios production arm a global heavyweight. I also think the company’s massive investment in its video-on-demand service could pay off handsomely. The number of people using its ITV Hub platform rose to 34.8m in September 2021, up a healthy 8% year-on-year.
Big rewards in store?
ITV might have to row extremely hard to continue taking the fight to US streaming giants like Netflix, Amazon and Disney. These firms are investing huge amounts in programming and technology to win viewers from traditional broadcasters. Total spending on content in 2021 rose 14% year-on-year to $220bn, according to Ampere Analysis, because of the huge sums being forked out by the streamers. And the number is predicted to swell to $230bn this year thanks to the contribution of Netflix et al.
Still, it’s my opinion that these competitive risks are reflected by ITV’s ultra-low share price. Besides, the FTSE 100 firm has proved it has what it takes to churn out popular programming too, from reality TV juggernaut Love Island to drama The Bay. I’d happily buy the business alongside Mondi right now.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.
