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With hundreds of companies listed across the FTSE indexes, it’s impossible to track them all. But in my search for value, a few UK-listed businesses have stood out as unusually cheap based on their growth potential, profitability, and valuation multiples. Below are two of the cheapest FTSE stocks I’ve come across. I believe both are worth closer inspection.
Melrose Industries
Let’s start with Melrose Industries (LSE:MRO). The FTSE 100 stock is up around 25% since I bought in around four months ago and such is my conviction, it’s my top holding right now. The company currently trades on a forward price-to-earnings (P/E) ratio of 15.2 — not particularly high for a business guiding for annual earnings growth of over 20% through to 2029. What’s more, it’s starting to deliver. Adjusted diluted earnings per share rose 30% to 15.1p in H1, driven by strong demand in aerospace, particularly via its GKN Aerospace business.
On a price-to-earnings-to-growth (PEG) basis — P/E adjusted for growth — Melrose looks even more appealing. The PEG ratio stands at just 0.75, making it materially cheaper than peers such as Rolls-Royce and GE, both of which trade on PEGs above 2 and P/E ratios closer to 40.
Melrose benefits from high barriers to entry in aerospace, with long-term contracts and sole-supplier status on 70% of sales. That’s a genuine moat.
However, it’s not risk-free. Net debt stood at £1.4bn at the end of H1 2025. While modest relative to cash flow, it remains something I’m monitoring, particularly if interest rates stay higher for longer or sector demand softens. Melrose has also been vulnerable to supply chain disruptions and cyclical swings in aerospace.
Synectics
Next up is Synectics (LSE:SNX). It’s a small-cap AIM-listed provider of surveillance and security systems and it’s new to my watchlist. Analyst forecasts suggest the stock trades on a forward P/E of 12.2 this year, dropping to 10.7 in 2026 and just 9.5 by 2027.
At the same time, expected dividend yields are forecast to rise from 2.3% to 3.3%, and net cash is projected to grow — although current net cash (£12.1m) is already near the 2027 forecast. That’s substantial for a company with a market cap of just over £50m.
Recent interim results (H1) highlighted accelerating momentum. Revenue rose 35% year on year to £35.5m, underlying operating profit increased 48%, and adjusted EPS surged 59%. Contract wins with West Midlands Police and a major Southeast Asian resort, along with geographic expansion into the Philippines, UAE, and North America, drove the business forward.
There are risks though. Synectics relies on large project-based contracts, which introduces lumpiness and concentration risk. Economic slowdowns could delay spending in key markets like transport and infrastructure. What’s more, interested investors should be wary of the gap between the buying and selling price on their brokerage.
Even so, Synectics’ combination of rising earnings, strong balance sheet, and under-the-radar status means it’s definitely worth considering. For those willing to take a closer look, it may well be one of the cheapest quality stocks in the FTSE universe today.
