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The FTSE 100 may be trading at a record high, but I can still see plenty of cheap shares out there. I’m basing this purely on price-to-earnings ratios, looking for stocks with a P/E below 10. These two immediately jumped out at me as worth considering.
NatWest looks unbelievable value
I was astonished to see that NatWest Group (LSE: NWG) qualifies on this basis. Like all the big banks, it’s had a rip-roaring run, with the share price up 212% over five years. The pace has slackened of late, though. In fact, the NatWest share price fell 7.3% in February, in a month when the blue-chip index as a whole jumped 7.5%. It’s still up 30% over 12 months, which makes its P/E of just 9.1 look ridiculously low.
That’s especially the case since NatWest reported a better-than-expected 24.4% jump in full-year profits to £7.7bn in February. It also announced a £750m share buyback for the first half of 2026 and upgraded its performance targets too.
That was a tip-top set of results yet investors were clearly hoping for even more. Many will have been concerned by comments from Jamie Dimon at JPMorgan Chase, who warned that if corporate customers are disrupted by the AI revolution, banks could end up nursing nasty impairments.
There are always risks after such a strong run. Perhaps the biggest is that interest rates are likely to continue falling, which could squeeze banking margins. But February’s drop has taken the heat out of the valuation, while pushing the trailing dividend yield back up to 5.25%. I think NatWest is well worth considering today. Even more so if markets wobble on Middle East volatility next week.
NatWest wasn’t the only stock to deliver strong results in February, only to take a beating.
IAG shares fall too
Shares in International Consolidated Airlines Group (LSE: IAG) have also been flying lately, up 25% over one year and 170% over three.
Yet they plunged 7.35% on Friday, despite the British Airways owner posting a “record” performance for 2025. Operating profit rose 13% to €5bn and revenue climbed 3.5% to €33.2bn. The board also lifted the dividend by 8.9% and unveiled a fresh €1.5bn share buyback.
Investors chose to focus elsewhere. There were concerns about a slowdown in cargo and passenger revenues in the fourth quarter, general economic bumpiness, and the fact that the growth was helped by lower fuel prices. There may also have been some profit-taking after such a strong run.
Today, the IAG share price looks excellent value, with a P/E of just 7.2. It’s looked cheap for years though, which probably reflects that running airlines is a risky business, as they’re vulnerable to wars, natural disasters, strike action, oil price swings and recessions. We may get proof of that next week, as conflict in Iran could drive up the oil price and disturb flights. Some may see that as a buying opportunity. IAG is worth considering but again, with a long-term view.
I can see plenty more cheap-looking shares on the FTSE 100, including JD Sports Fashion, which has a P/E of just 6.6, and easyJet on around seven. If Iran concerns hit FTSE 100 shares next week, there could be even more value out there.
