These 2 FTSE 100 shares look like incredible bargains to me

A stock price graph showing growth over time, possibly in FTSE 100

Last week, the FTSE 100 hit its highest level since the pandemic crisis. Despite fears of a market crash, global indices are rebounding well and several sectors are seeing a surge. But, instead of focussing on booming stocks, I love to find and pick bargain stocks for my portfolio. Here are three shares that I think look cheap, show potential for growth, and offer value at the current market price.

Rebounding sector  

Smith & Nephew (LSE:SN) is a leader in the orthopaedic surgery market. It specialises in the manufacture of surgical devices and equipment.

The medical manufacturer’s shares have slid 18.7% in 2021. It is now trading at its lowest point since 2018 at 1,273p. However, I think Smith & Nephew shares could rebound nicely in the next 12 months, given that elective procedures are making a comeback since the pandemic.

Research shows that the waiting list for elective orthopaedic and joint replacement surgery is at an all-time high. And as patterns in the healthcare sector normalise, the number of patients opting for elective care is increasing. This is reflected in Smith & Nephew’s healthy first-half (H1) 2021 results. Revenue grew 21.3% (from H1 2020) to $2.6bn, with a trading profit of $459m. The second quarter of 2021 showed a 40.3% jump in revenue compared to the same period in 2020. This is a great sign of recovery that I feel is still not reflected in its share price.

The driving factors behind the fall in share price could be the fear of another spike in Covid-19 cases. This could disrupt the healthcare system again, forcing the public to stay away from hospitals.

But, Smith & Nephew is a market leader with huge R&D potential and the possibility of a sharp spike in sales in the coming months. This is why it is on top of my shopping list of bargain FTSE 100 shares to buy now.

FTSE 100 dividend bargain

Legal and General (LSE:LGEN) has not seen a recent dramatic fall in share price like Smith & Nephew. But, it still looks like a bargain to me at its current price of 275p. Here’s why.

A 6.4% return in 2021 is underwhelming given the potential of the business. During the same period, its competitor Aviva is up 21%. The FTSE 100 index too, is up 9.5% in 2021, which highlights Legal & General’s poor returns.

Its stock trades on a price-to-earnings (P/E) ratio of 7.3 which points to an undervalued share. Combined with the dividend yield of 6.4% a year, the UK insurer looks like an excellent income pick that offers growth potential too. With the recovering economy and the ageing British population, I think Legal & General could easily break through the 300p ceiling over the next 12 months. But, there is a reason why its share price is falling. 

The financial sector has been under scrutiny for the past six months. This is because of the growing fears of inflation and a market crash, which is bound to affect insurance companies. But the FTSE 100 has been showing strong signs of recovery and global markets too, look robust. Legal & General is one FTSE 100 bargain that I’m looking to add to my portfolio for its dividend yield and growth potential.

The post These 2 FTSE 100 shares look like incredible bargains to me appeared first on The Motley Fool UK.

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More reading

  • The best FTSE 100 dividend stocks to buy today
  • Shares to buy now: two FTSE 100 fallers I’d consider
  • 3 shares to buy as the FTSE 100 tanks
  • 3 of the best UK shares to buy now
  • 2 FTSE 100 shares that are ideal for generating passive income

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Smith & Nephew. 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.