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Retirement saving: why I’d buy these 2 FTSE 100 shares in an ISA or SIPP today

Since the FTSE 100 is made up of a wide range of companies that operate in a variety of sectors, its performance does not paint the full picture for its members.

As such, some FTSE 100 stocks have surged higher in recent months. By contrast, others have become increasingly unpopular among investors.

Here are two large-cap shares that have contrasting recent performances. While the reasons for buying them may be very different, both companies could deliver improving returns that help you to build a nest egg for retirement.

Smith & Nephew

Medical devices company Smith & Nephew (LSE: SN) has enjoyed a high level of growth over the last year. Its share price has gained over 40% at a time when the prospects for the FTSE 100 have become increasingly uncertain.

Looking ahead, the company may offer further capital growth potential. Its relatively low correlation with the wider economy may mean that it is less impacted by the prospect of a slowdown in the global GDP growth rate. This may lead to improving investor sentiment, with increasingly risk-averse investors likely to pivot towards companies that offer defensive credentials.

Smith & Nephew also offers long-term earnings growth potential. Demand for its products is likely to increase due to demographic changes, with an ageing world population that is also increasing in size potentially leading to rising sales.

Following its recent share price rise, the company trades on a price-to-earnings (P/E) ratio of around 25. This may suggest that it is overvalued. However, with its defensive characteristics and its upbeat financial growth prospects, it could continue to outperform the FTSE 100 over the long run.

BT

Unlike Smith & Nephew, BT (LSE: BT.A) has experienced a hugely challenging period in recent months. The company’s shares have declined by around 27%, with the business reporting a disappointing financial performance in its recent update.

For example, revenue and profit both declined in the first quarter of its current financial year. For the full year, BT is forecast to post a decline in net profit of 2%.

Although its near-term prospects may be somewhat downbeat, the company’s investment in improving the customer experience appears to be paying off. Its fixed line churn declined to 1.3% in the first quarter of the current year, while it has recorded 12 successive quarters of improving net promoter scores.

An improving customer experience could help to differentiate the business in what remains a highly competitive quad-play market. The investment being made by the business may also strengthen its long-term financial outlook, and could prompt a recovery.

Trading on a P/E ratio of just 6.2, BT appears to offer a wide margin of safety. Therefore, it could prove to be an appealing value investing opportunity that posts a recovery over the coming years.

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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.