The FTSE 100 is near its all-time high. But I’m still seeing many cheap blue-chip shares

At FTSE 100 index – which represents the 100 largest companies in London Stock Exchange – has risen higher in the past three months. As a result, it is now within an inch of the all-time high of 7,877.45 points (it may have breached this level when you read this).

Those who like ‘value’ when investing may be put off by the fact that Footsie is very close to its highs. But, of course not. That’s because a look at the index shows there are still plenty of cheap blue-chip stocks to buy right now.

The final height does not tell the full story

The FTSE 100 is a ‘market capitalization’ index. This means that the largest company in the index (AstraZeneca, shell, BPetc) have the greatest weight in it (and the greatest influence).

Recently, many of the index’s biggest constituents, such as Shell and BP, have seen their share prices rise. This has pushed the FTSE up to new records.

But what is interesting is that many Footsie companies remain below their own highs, and are currently trading at low valuations. So there are still plenty of opportunities for value seekers.

FTSE shares are cheap

One area where Footsie is considered cheap these days is insurance. In this sector, many blue-chip stocks trade at single-digit price-to-earnings (P/E) ratios.

Legal & General is a good example. Currently, the P/E ratio is only 7.5. Kickers? The dividend yield here is about 7.5%, which means that if I invest £1,000 in shares, I will get an income of around £75 per year (although dividends are not guaranteed).

Another area that seems to offer value today is healthcare. One stock in this sector that I recently bought for my portfolio is joint replacement specialist Smith & Nephew. Currently, it has a P / E ratio of 17. I think this is a good value, given the tailwinds of the world’s aging population should provide next year. To put the value in perspective, compete with the US Stryker it currently has a P/E ratio of around 26.

I also think energy stocks are cheap. Currently, Shell and BP have a P/E ratio of only six, which is less than half of the market average. It seems very reasonable to me, given the momentum of this company now.

Of course, there are risks associated with the shift to renewable energy. But in the low range, I think there is potential for the stock price to go up.

The important thing is to be selective

It is worth pointing out that investors should be very selective when buying cheap shares. Often, stocks with low valuations are low for a reason. For example, they may have a lot of debt on their balance sheet. Debt can cause problems, especially in times of economic weakness.

So it is important to spend some time on research. It is also good to spread capital in several different stocks. This can increase your chances of generating wealth from the stock market.