The FTSE 100 may have experienced a period of uncertainty in recent months, but its long-term growth prospects remain high.
There are a number of large-cap shares which could offer appealing risk/reward ratios for long-term investors. As such, they could prove to be a more efficient use of your capital than buying gold or playing the lottery.
With that in mind, here are two FTSE 100 shares that could produce improving performances over the coming years. Buying them today could make the task of generating a seven-figure portfolio easier.
Next’s (LSE: NXT) recent trading statement showed that it has been able to deliver impressive growth despite weak consumer confidence. In the third quarter, its sales grew by 2%. This should enable it to meet its guidance for the full year, which is expected to include a rise in net profit of around 5%.
The outlook for UK retailers is likely to remain subdued in the short run. Consumer confidence has been weak for many months, and political risks could maintain the status quo in this regard.
However, with Next having an innovative strategy that is seeking to adapt to changing consumer tastes, it could outperform many of its sector peers. For example, it is investing in its omnichannel offering, as well as in adjacent leisure markets that could increase footfall to its stores.
Trading on a price-to-earnings (P/E) ratio of 14.5, it seems to offer a margin of safety at the present time. Its track record of growth during periods of weak economic performance helps it to stand out when compared to other retailers, and could provide its investors with improving total returns in 2020 and beyond.
InterContinental Hotels (LSE: IHG) faces an uncertain near-term outlook. Weaker-than-expected performances in key markets such as the US and China, as well as ongoing unrest in Hong Kong, contributed to a decline in revenue per available room (RevPAR) in the third quarter of 0.8%.
However, the business is investing for the long term. For example, it is launching a new brand called Atwell Suites that could catalyse its growth rate. It is also enhancing its loyalty scheme through partnerships that may provide it with a stronger competitive position through an increasingly unique offering when compared to its sector peers.
Looking ahead, InterContinental Hotels is forecast to post a rise in its bottom line of 7% in the next financial year. However, this growth rate could improve as the business has exposure to markets that may offer strong long-term increases in demand.
With the world economy’s growth rate expected to improve in 2020, global stocks such as InterContinental Hotels could become increasingly popular among investors. Therefore, now could be the right time to buy a slice of the stock after investor sentiment towards it has weakened over recent months.
Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended InterContinental Hotels Group. 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.