Hoping to boost my portfolio in 2025, I’ve been digging for undervalued shares on the FTSE 100 — and I think I’ve found some! Whether they will answer my prayers remains to be seen — but I think they’re worth considering for similarity-minded individuals. 

Hunting for value

For value-focused investors like myself, knowing what counts as a cheap stock isn’t always straightforward. Valuation metrics like the price-to-earnings (P/E), P/E-to-growth (PEG), price-to-sales (P/S), and price-to-cash-flow (P/CF) ratios can help uncover hidden opportunities in the Footsie.

The P/E ratio compares a company’s share price with earnings and helps gauge how much investors are paying for profits. The PEG ratio builds on this by factoring in expected growth — anything under one could be undervalued relative to growth. 

P/S reflects how much investors are paying for every pound of revenue, while P/CF measures how a company’s market cap stacks up against the cash it generates. Lower figures generally indicate better value, though sector context matters. 

With this in mind, here are three FTSE 100 shares that look appealing right now.

Rio Tinto 

Mining giant Rio Tinto (LSE: RIO) stands out with a rock-bottom P/E ratio of 7.88, well below the FTSE average. This suggests the market isn’t pricing in its earnings strength. Its PEG ratio of 0.68 reinforces the view that the stock could be undervalued relative to its growth prospects. For long-term value investors, this is a good combination.

The P/S ratio of 1.69 is on the higher side, indicating investors are paying a slight premium for the company’s revenue. However, given Rio’s exposure to high-margin commodities like iron ore and copper, this might be justified. A P/CF ratio of 5.72 also suggests decent value, implying investors are paying just under six times the company’s annual cash flow. 

However, a key risk is the company’s dependence on Chinese demand for iron ore. Any slowdown in China’s construction or manufacturing sectors could hit Rio’s earnings hard.

Overall, Rio Tinto looks to me like a fundamentally cheap FTSE 100 stock. For those seeking exposure to natural resources and dividends, it’s especially appealing.

easyJet

After rejoining the FTSE 100 in early 2024, easyJet (LSE: EZJ) currently trades at a fair P/E ratio of 10.83. Its PEG ratio of 1.08 is slightly above one, suggesting its current valuation is in line with expected earnings growth.

However, other metrics tell a more attractive story. The airline has a P/S ratio of 0.46, indicating its shares are relatively cheap based on revenue. More striking is the P/CF ratio of just 2.69, suggesting the market may be overlooking the company’s improving cash position after a tough few years for aviation. 

But the airline sector remains vulnerable to external shocks. easyJet’s profitability could be threatened by rising fuel prices or geopolitical instability, which may offset recent improvements in passenger numbers and margins.

Still, with travel demand on the rebound, I think it could offer a low-risk entry point option for value investors keen to gain exposure to the sector. Together, both stocks represent some of the best value available on the FTSE 100 today, so I plan to buy some shares once pay day arrives.