I’m always on the lookout for value stocks. And while the FTSE 100 and FTSE 250 have posted strong performances this year, I still see plenty of undervalued shares out there.

In fact, this year has proved to be difficult for a handful of Footsie stalwarts. Of those, I’ve been keeping a close eye on Burberry (LSE: BRBY) and BP (LSE: BP.). They’re two stocks that have been firmly on my radar over the past couple of months. With their share prices sliding, I reckon they could be the best value stocks out there. If I had the cash, I’d add them to my portfolio today.

Fashion giant

Let’s begin by investigating Burberry’s performance. Unfortunately for shareholders, this year has been terrible for the stock.

By far, the iconic British brand had been the worst performer on the FTSE 100. So much so that it recently got demoted to the FTSE 250. During 2024, it has lost 54.3% of its value. It’s down a whopping 66.4% in the last 12 months.

The reason for its poor performance has been multiple profit warnings. Clearly, they’ve sparked fear amongst investors. In its most recent update, Burberry said it now expects to post an operating loss in its first half. Moving forward, the business certainly faces a challenging turnaround mission.

But its shares now look dirt cheap. In fact, they’re sitting at a 15-year low. Today, I could pick up Burberry trading on a price-to-earnings (P/E) ratio of just 8.7. Its long-term historical average is around 22. So on paper, there’s plenty of value in the stock today.

Furthermore, while it will be challenging, I’m optimistic the business can turn itself around and it has already started to implement measures to reverse its fortunes.

For example, it parted ways with former CEO Jonathan Akeroyd and replaced him with Joshua Schulman, former CEO of Coach. In tandem with that, management has laid out plans for a cost-cutting programme.

Granted, Burberry’s turnaround won’t be a quick process. And it will face struggles along the way. However, I see long-term value in its shares.

Oil and gas powerhouse

BP has fared slightly better than the fashion firm. However, its share price is still down 18.8% year to date.

Its recent struggles can be attributed to falling oil prices. And that highlights a risk with the stock: it’s cyclical. The BP share price tends to mirror the price of oil. For example, the stock soared in 2020 when the price of oil shot up. Of course, when prices fall, the reverse happens.

But there’s one positive to its declining share price. That’s the fact that it has pushed up its dividend yield. Its payout now stands at 6.1%. That’s comfortably above the FTSE 100 average.

To add to its impressive yield, the business has also committed to a $14bn buyback scheme running between last year through to the end of 2025. It’s on track to buy back $7bn this year. So, the firm is well on its way to achieving its target.

Another risk I see with BP is the energy transition. However, it’s now predicted that demand for oil will rise this decade. What’s more, BP shares look like cracking value, trading on a forward P/E of 6.5.