The FTSE 100 index has shown resilience, rising by 3% since the start of the year, despite numerous geopolitical and economic challenges. Even achieving an all-time high this year, the index’s overall strength contrasts sharply with some of its individual constituents. Among these, several stocks stand out as potentially undervalued.
Undervalued FTSE 100 Stocks to Watch in May
Investors seeking promising long-term opportunities may find value in three specific stocks: Associated British Foods, Reckitt Benckiser, and WPP. Each company faces distinct challenges yet maintains potential for growth:
1. Associated British Foods
- Current Price-to-Earnings (P/E) Ratio: 14
- Dividends Yield: 3.6%
- Year-to-Date Share Price Change: -14%
Associated British Foods (LSE: ABF) contends with two major challenges. Firstly, it strives to justify premium pricing for its food products, leveraging brands like Twinings. Secondly, the Primark discount clothing chain struggles to attract investor attention, despite its strong customer base. As inflation impacts profit margins amid rising Middle Eastern tensions, the company forecasts manageable cost consequences for 2026. Moreover, plans are underway to demerge Primark into a standalone entity, which could enhance investor perception and value.
2. Reckitt Benckiser
- Current Price-to-Earnings (P/E) Ratio: 10
- Dividends Yield: 4.6%
- Year-to-Date Share Price Change: -25%
Reckitt Benckiser (LSE: RKT) has experienced a significant downturn, with shares down 25% this year. The company grapples with various issues, including legal risks related to its infant formula segment and inflation in ingredient costs. Additionally, consumer sentiment has weakened in key markets, leading to a decline in sales. However, Reckitt’s premium brands and essential product categories provide it with a competitive edge. Investors may find that Reckitt’s potential for recovery is considerable, courtesy of robust market positioning.
3. WPP
- Current Price-to-Earnings (P/E) Ratio: N/A
- Dividends Yield: 5.6%
- Year-to-Date Share Price Change: -21%
The advertising giant WPP (LSE: WPP) is another stock to consider, though it carries a degree of risk. Its shares have plummeted by 21% in the first few months of 2026, continuing a downward trend from the previous year. Investor concerns primarily revolve around potential disruptions from artificial intelligence in the advertising sector. Despite a 4% decline in like-for-like revenue, WPP retains strong clients and possesses deep industry expertise. Its strategic plans to integrate AI may pave the way for future recovery.
As the landscape continues to shift, these three undervalued FTSE 100 stocks represent potential opportunities for long-term investors. Given current market dynamics, now may be an ideal time to explore these investments.
