Retire wealthy: why the Santander share price could smash the FTSE 100

Banco Santander SA (LON: BNC) appears to offer superior value for money compared to the wider FTSE 100 (INDEXFTSE: UKX).

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The share price of Santander (LSE: BNC) may have fallen in recent months, but following its 20% decline in the last year, the stock now appears to offer better value for money than the FTSE 100. This could indicate that it has the potential to outperform the index over the long run.

Of course, there are other shares which could beat the UK’s main index. Reporting on Monday was a company that seems to be performing well, and which could offer growth at a reasonable price. As such, now could be the right time to buy both stocks for the long run.

Impressive performance

The company in question is consumer security software specialist Kape Technologies (LSE: KAPE). It released interim results that showed a rise in revenue from core activities of 14.2%, increasing to $24.1m. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 45.1% to $4.3m, with the business achieving significant progress in developing its software as a service (SaaS) revenue model.

Following the end of the half-year period, the company acquired Intego. It is a highly complementary business that could help the company to deliver against its key growth priorities. It expects the momentum from the first half to continue into the second half of the year, and this could help to catalyse its share price performance.

With Kape forecast to post a rise in earnings of 20% in the current year, followed by further growth of 39% next year, it appears to have a bright future. Its price-to-earnings growth (PEG) ratio of 0.7 suggests that it could offer good value for money at the present time.

Low valuation

Also offering a low valuation is Santander. Following its share price fall over the last 12 months, it now trades on a price-to-earnings (P/E) ratio of around 9. This suggests that it offers a wide margin of safety, and may be able to deliver FTSE 100-beating performance over the medium term.

The bank’s income potential appears to be impressive. It has a dividend yield of 5.4% at the present time from a payout which is covered more than twice by profit. This suggests that there is scope for a fast pace of dividend growth over the medium term. The bank’s earnings growth of 5% this year and 9% next year are likely to make its management team increasingly confident in the financial prospects for the company.

With Santander being a global operation, it may benefit more than some of its UK peers from continued world GDP growth. Despite the risk of a full-scale trade war, the US and China continue to offer strong growth forecasts. This could help to catalyse the financial performance of the company, and also improve investor sentiment. As such, now could be the right time to buy it, the company having the potential to boost an investor’s retirement savings prospects.

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 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.

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