HomeStock MarketI’d snap up cheap FTSE 100 stocks before the UK’s premier index...

I’d snap up cheap FTSE 100 stocks before the UK’s premier index hits 8,000 points!

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Some FTSE 100 stocks are unmissable bargains right now due to recent economic volatility, in my opinion. However, as the index edges towards the 8,000 points mark, and investor sentiment is improving, I reckon now is the time to act before prices and valuations rise.

Improving sentiment or false dawn?

The FTSE 100 index is up 6% over a 12-month period. At this time last year, the index sat at 7,471p, and currently trades for 7,925p.

I’d have to go back to February 2023 for the last time it passed the all-time high of 8,000p. Even then, it stayed above this point for less than a day.

Data released recently shows that retail spending came in better than expected in January and February of this year. This helped allay fears of a sustained recession, and sparked murmurings of improved investor sentiment. Plus, when you consider that many economists reckon we’re set for interest rate cuts sooner rather than later, as well as inflation levels coming down, I’m not surprised to see the FTSE 100 edging upwards.

With this cocktail of tailwinds in the back of my mind, I can’t help wondering when stocks will begin to see their prices rising. Now could be the perfect time to capitalise and bolster my holdings, in my view.

One stock I’m eyeing up for when I next have some investable cash is British American Tobacco (LSE: BATS).

Passive income gem

British American Tobacco is one of the world’s largest businesses of its kind with an enviable reach of over 180 markets, and a portfolio of around 300 brands.

The shares have fallen 18% over a 12-month period from 2,885p at this time last year, to current levels of 2,364p.

I’d love to buy British American Tobacco shares for a few key reasons. Firstly, I’m looking to bolster my passive income stream, and it is a Dividend Aristocrat. The firm’s generous investor rewards policy is not to be sniffed at. At present, a dividend yield of over 9% is very enticing. Plus, the business generates cash hand over fist, which help supports this. However, I’m conscious dividends are never guaranteed.

Next, the shares look dirt-cheap to me on a price-to-earnings ratio of just six. For context, the FTSE 100 average is close to double this.

Finally, the firm’s track record, as well as wide profile and brand power, are enviable. All of these aspects have helped the business grow, providing solid returns over a long period. Plus, these traits help the business continue to remain one of the most attractive options to dividend seekers. However, I do understand past performance is not a guarantee of the future.

From a bearish view, the looming spectre of smoking bans linked to the ill-effects on health is a worry. However, it seems to me this threat has been around a while, and tobacco businesses still seem to be making money.

Furthermore, economic volatility could hurt sales figures, as consumers battle with rising food, energy, and other living costs. Performance and returns could be impacted by this.

Overall, I reckon British American Tobacco is a bargain right now. I do think it may see its share price increase as sentiment and the wider index experiences a potential boost in the coming months.

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