£5k to invest today? I’d buy these 2 bargain FTSE 100 stocks in an ISA

These two FTSE 100 (INDEXFTSE:UKX) stocks could offer long-term growth potential, in my opinion, after their recent declines.

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The FTSE 100 has gained over 25% since its market crash in February/March. Despite this, a number of its members appear to offer good value for money at the present time. This could present a buying opportunity for long-term investors who are able to look beyond the short-term risks facing the index.

With that in mind, here are two FTSE 100 shares that could be worth buying in a Stocks and Shares ISA today with £5k, or any other amount. They could improve your financial position over the coming years.

FTSE 100 bank RBS

The first quarter trading update released by RBS (LSE: RBS) last month highlighted the challenging outlook facing the FTSE 100 banking sector. The company was expecting a 25 basis point reduction in interest rates in 2020, but coronavirus has caused a 65-point reduction. This will adversely impact the bank’s earnings prospects, according to its update.

Furthermore, a challenging economic outlook may mean demand for many of its products and services will decline. It could also experience a higher proportion of defaults and late payments that negatively impact on its financial performance.

Despite this, RBS could offer long-term recovery potential relative to the wider FTSE 100. It has been able to improve its financial strength over the last few years, and plans to reduce costs as the economic outlook improves.

Investor sentiment has weakened of late, which could mean it now offers a wide margin of safety. Since the start of the 2020 calendar year, the RBS share price has fallen by around 47%. It’s also shown little sign of mounting a successful recovery. As such, it may experience further challenges in the short run. But, over the long run, it could prove to be a FTSE 100 recovery opportunity that delivers improving performance as the economic outlook returns to normal.

RSA

Another FTSE 100 share that’s experienced a significant decline in its market valuation this year is RSA (LSE: RSA). The insurance company’s stock price is currently down by around 23% in 2020. This suggests investors have factored in many of the risks it faces as a result of an opaque economic outlook.

The FTSE 100 company’s recent trading update showed it’s still too early to determine the size of insurance claims relating to coronavirus. However, claims in segments such as travel insurance are likely to be significant and could impact negatively on the company’s near-term financial outlook.

Despite this, RSA appears to be in a solid financial position to overcome the short-term challenges it faces from a weak economic outlook. For example, its Solvency II coverage ratio of around 151% falls within its target range of 130-160%.

Therefore, it could offer an improving financial performance over the long run. And that could make now the right time to buy a slice of ithe business within a diversified portfolio of FTSE 100 shares.

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 considered so you should 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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