Forget buy-to-let: I think these 2 FTSE 100 stocks can help you obtain a £1m ISA

I’m optimistic about the investment prospects of these two FTSE 100 (INDEXFTSE:UKX) retail stocks.

| 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.

With the outlook for the UK economy being relatively uncertain at the present time, the prospects for the buy-to-let sector could be challenging.

Alongside this, many property prices appear to be overvalued versus incomes, while catalysts such as low interest rates and the Help to Buy scheme may not last in perpetuity.

Although those same factors could impact negatively on the retail sector, there appear to be a number of FTSE 100 retail stocks that offer wide margins of safety.

As such, now could be the right time to buy these two retailers for the long term, with them appearing to have solid growth prospects.

JD Sports Fashion

Sports, fashion and outdoor brands retailer JD Sports Fashion (LSE: JD) released an encouraging trading update on Wednesday to coincide with its AGM. It has continued to achieve positive like-for-like sales growth in its core operations in the UK and internationally. The company has increased the size of its store estate, with there being a net increase of 29 stores in the financial year to 29 June. As expected, the focus has been on international growth, which represents a significant opportunity to catalyse the company’s financial outlook.

In the current year, JD Sports Fashion is forecast to post a rise in earnings of 12%. Since the company trades on a price-to-earnings growth (PEG) ratio of just 1.6, it seems to offer good value for money. With an increasingly internationally-focused business model, it seems to have an impressive outlook. Its omnichannel approach and plans to further increase the size of its store estate could boost its financial performance over the long run.

ABF

Primark owner ABF (LSE: ABF) appears to be in a strong position to deliver an improving bottom line. Although there are risks facing the wider retail sector from weak consumer sentiment as the Brexit process moves along, the company’s budget offering could prove popular among shoppers. They may trade down to cheaper alternatives, with Primark having performed relatively well in previous periods when consumer confidence has been low.

Alongside its Primark operations, ABF has a number of other divisions. They include Ingredients and Sugar. Although their performances have been mixed in recent quarters, they provide the business with a degree of diversification so that it is not wholly reliant on the retail segment for growth.

With ABF forecast to post a rise in earnings in the current year of 5% following an increase in its bottom line in each of the last three years, the company could become more popular among investors at a time when the outlook for the UK economy is somewhat uncertain.

As such, now could be the right time to buy a slice of the company, rather than invest in buy-to-let as housing affordability remains a potential threat to house price growth over the coming years.

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 has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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

How much would I need to invest in income shares to earn £300 a month?

What kind of lump sum would be required to earn £300 a month by taking advantage of some of the…

Read more »

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »