How I’d invest £10k: I’d buy these 2 bargain FTSE 100 shares in a Stocks and Shares ISA

I think these two FTSE 100 (INDEXFTSE:UKX) shares could offer good value for money, as well as long-term growth potential.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Risks to the global economic outlook may be high at present. Continued increases in tariffs as part of a wider global trade war appear to have caused investors to become increasingly cautious over recent months. This has led to a challenging period for the FTSE 100, which has seen the index decline by 6% in the last three months.

Although further falls cannot be ruled out, now could be a good time to buy undervalued shares. They may offer wide margins of safety that lead to increasing profitability for their investors over the long run. So here are two prime examples that could be worth buying in a Stocks and Shares ISA today.

Polymetal

The prospects for gold miners such as Polymetal (LSE: POLY) have improved significantly over recent months. The price of gold has moved higher after a lacklustre performance over recent years, with declining US interest rates and an increasing level of fear among investors leading to higher demand for the precious metal.

This could be good news for Polymetal’s financial outlook. In fact, it’s forecast to post a rise in its bottom line of 16% in the current year, followed by further growth of 19% next year. Despite an improving rate of earnings growth, the stock trades on a price-to-earnings growth (PEG) ratio of just 0.9. This suggests it could offer a margin of safety – even though its share price has surged higher over recent months.

Of course, an improving global economic outlook could cause gold miners to become less popular among investors. However, with the stock offering an appealing valuation, and scope to deliver further growth, it could prove to be a worthwhile purchase.

Aviva

Another FTSE 100 stock that currently appears to offer good value for money is insurance business Aviva (LSE: AV). Its shares are now trading on a price-to-earnings (P/E) ratio of just 6.6, with investors seemingly concerned about its mixed recent results.

Although they showed the company delivered strong general insurance results, it also suffered from weak operating conditions in life insurance and asset management. As such, its operating profit for the first six months of the year increased by just 2%.

Looking ahead, Aviva is reviewing its Asian businesses in order to maximise their growth potential. It’s also seeking to deliver an improved customer experience to enhance its competitive position. Such changes could lead to a stronger financial outlook for the company, with its plans to cut leverage also providing an improved foundation for long-term growth.

Therefore, the stock may be undergoing a period of change at the present time that causes investor sentiment to remain weak in the short run. But its long-term growth prospects appear to be bright, while a low valuation suggests it offers investment appeal.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Aviva. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

This FTSE sell-off gives me an unmissable chance to buy cut-price UK stocks!

The last few months have been tough for UK stocks and their troubles aren't over yet, but Harvey Jones isn't…

Read more »

Investing Articles

Here’s the forecast for the Tesla share price as Trump’s policies take focus

The Tesla share price surged following Donald Trump’s election victory, but the stock is trading far above analysts’ targets. Dr…

Read more »

Investing Articles

£15,000 in cash? I’d pick growth stocks like these for life-changing passive income

Millions of us invest for passive income. Here, Dr James Fox explains his recipe for success by focusing on high-potential…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Here’s my plan for long-term passive income

On the lookout for passive income stocks to buy, Stephen Wright is turning to one of Warren Buffett’s most famous…

Read more »

artificial intelligence investing algorithms
Growth Shares

Are British stock market investors missing out on the tech revolution?

British stock market investors continue to pile into ‘old-economy’ stocks. Is this a mistake in today’s increasingly digital world?

Read more »

Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Investing Articles

My 2 best US growth stocks to buy in November

I’ve just bought two US growth companies on my best stocks to buy now list, and I think they’re still…

Read more »

Investing Articles

£2k in savings? Here’s how I’d invest that to target a passive income of £4,629 a year

Harvey Jones examines how investing a modest sum like £2,000 and leaving it to grow for years can generate an…

Read more »

Renewable energies concept collage
Investing Articles

Down 20%! A sinking dividend stock to buy for passive income?

This dividend stock is spending £50m buying back its own shares while they trade at a discount and also planning…

Read more »