As FTSE 100 shares sink, here’s one I think’s too cheap to ignore!

December started strongly for the FTSE 100 leading index of shares. But the early Santa Rally quickly fizzled out like a cheap sparkler as fears over the global economy resurfaced.

By the end of the last full trading week of 2024, the Footsie slumped to within a whisker of 8,000 points. This was the index’s worst week in the calendar year and a troubling omen heading into 2025.

Multiple dangers

Stocks have collapsed for a multitude of reasons. More recently, worries over a US government shutdown due to budget issues spooked investors. But there are other lingering dangers like stubborn inflation and its impact on interest rates, potential new US trade tariffs, and a prolonged slowdown in China’s economy.

Yet despite these threats, I’m not panicking. As someone who invests for the long term, I’m largely unconcerned by volatility on financial markets.

I’d rather see the value of my investments steadily rise, of course. But over time, I’m confident the blend of shares, trusts, and funds I buy will deliver healthy capital gains and dividend income.

Running towards the fire

That’s not to say my investing strategy is unchanged during market downturns, however.

Without exception, every market sell-off sees quality stocks heavily sold off alongside weaker companies. So I use such opportunities to pick them up at bargain prices, and hopefully watch them soar in value when the market comes to its senses.

It’s a tactic that’s made Warren Buffett the world’s sixth-richest man, according to Forbes. Who am I to argue with him?

A top FTSE faller

BAE Systems (LSE:BA.) is one FTSE 100 share I’m considering following a recent share price retracement.

At £11.50 per share, it remains 3% higher than it was at the start of 2024. But a 17% decline in the last six weeks could be a top dip buying opportunity for me.

Like other defence stocks, BAE shares have tumbled following Elon Musk’s appointment as head of government efficiency under President Trump. Investors fear that military spending could suffer as part of wider cost-cutting under the new administration.

Such cutbacks could be a big deal for BAE. In 2023, it generated 42% of group revenues Stateside, making the US by far its single most important market.

Yet on balance, the company outlook remains super bright irrespective of Musk’s intentions. I still expect US arms spending to rise strongly given the growing perceived threat of Russia and China, along with rising instability in the Middle East.

In fact, President-elect Trump’s return could be a net gain for BAE given the extra pressure this will put on NATO countries to raise their own defence budgets.

As a critical supplier to the US, UK, and Australian militaries, I remain convinced the firm’s earnings will rise strongly in 2025 and beyond.

Time to buy?

I’ve been put off buying BAE Systems shares following their stratospheric rise following early 2022. The aftermath of Russia’s invasion of Ukraine has turbocharged share prices across the defence sector. And I thought I’d missed the boat.

But the company’s recent fall means I’m tempted to now open a position. Its forward price-to-earnings (P/E) ratio for 2025 is now a modest 15.2 times.