Fortescue shares are shockingly cheap right now…

Fortescue Metals Group Limited (ASX: FMG) shares have avoided the market crash, but this one indicator is screaming good value right now…

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Fortescue Metals Group Limited (ASX: FMG) shares climbed 1.88% higher yesterday and investors would be reasonably happy right now. While the S&P/ASX 200 Index (ASX: XJO) has slumped 26.48% this month, Fortescue is trading down just 3.47%. But is it in the buy zone?

Why Fortescue shares could be an unbelievable bargain

Even before the current bear market, Fortescue shares were pretty cheap. Now I think they're an absolute bargain. The Aussie miner has proven to be largely non-cyclical so far, which is a great quality for an ASX mining stock. For context, the BHP Group Ltd (ASX: BHP) share price is down 15.48% in March. 

But what I'm really looking at is Fortescue's price-to-earnings (P/E) ratio. Fortescue shares are trading at a P/E of just 3.45 times right now. That means you theoretically have to spend $3.45 per $1 returned in earnings. That is screaming a bargain buy to me.

Yes, yes, P/E ratios can be misleading in times like this. Dividend announcements are often lagging, and we're already seeing ASX 200 companies slash their dividends left and right. But there are signs that economic activity is picking back up in China, which means Fortescue may be able to continue earning. Sure, I'd expect to see a hit in August from all this COVID-19 disruption.  But that doesn't mean that it Fortescue shares can't also be a bargain at the moment.

If we're looking at like-for-like comparison, BHP shares are trading at a P/E of 8.79 times right now. Even an Aussie gold miner like St Barbara Ltd (ASX: SBM) is trading at 12.07 times. Assuming we still see some demand out of China, Fortescue is looking like good relative value.

But… what if the ASX 200 falls lower?

This is an understandable concern for Fools at the moment. The reality is that even the pros can't perfectly pick the bottom of the market. If you're in a position to, the best thing you can do is buy good value shares like Fortescue with any spare cash. Never put in more than you can afford to lose, but don't sit on the sidelines in fear.

Good value buying right now could set you up for the future. I view bear markets as a fire sale on assets, which is where you can go hunting for bargains. If you're being brave where others are fearful, it could pay dividends in the decades to come.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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