The doubling of Bitcoin’s price in 2019 means that many investors may be wondering whether to buy it. A significant problem with the virtual currency, however, is that its price is dependent upon investor sentiment rather than data. This means that it is not possible for an investor to deduce whether it offers good value for money at a specific time.
By contrast, there are a number of FTSE 100 shares that appear to be trading on low valuations at the present time. Here are two prime examples that could outperform Bitcoin over the long run, thereby improving your chances of making a million.
Generic medicines specialist Hikma (LSE: HIK) recently reported an encouraging set of half-year results. They showed a rise in revenue of 7%, as well as an increase in core operating profit of 15%, when compared to the same half of the prior year.
The company continues to invest in its pipeline, increasing its investment in R&D during the period. This could strengthen its market position, and lead to improving financial performance.
Looking ahead, Hikma is expected to post a rise in its bottom line of 3% this year, with growth of 6% forecast for next year. Since it trades on a price-to-earnings (P/E) ratio of 17, it seems to lack a margin of safety at the present time. However, with demand for its products across a variety of markets likely to increase rapidly over the long run, it could be worthy of a premium valuation when compared to its FTSE 100 peers.
Therefore, now could be a good time to buy a slice of the business. Its relatively low correlation with the wider economy may mean that it offers resilient growth during an uncertain macroeconomic and political period.
Another FTSE 100 share that could offer long-term growth potential is aerospace and defence company Rolls-Royce (LSE: RR). Its share price performance has been somewhat disappointing over recent months.
A key reason for this has been its disappointing updates. For example, its most recent trading update highlighted that it expects its financial performance for the full year to be towards the lower end of previous guidance. This is owing to the cost implications of issues faced within its civil aerospace division, where issues regarding its Trent 1000 engines are ongoing.
Despite this, the performance of the remainder of its business has improved over recent months. This means that it is on track to generate at least £1bn in free cash flow in 2020, which is in line with its overall plan.
Rolls-Royce currently trades on a price-to-earnings growth (PEG) ratio of just 0.4. This suggests that while its share price performance may continue to disappoint in the short run, it could produce capital growth over the long run that makes it a worthwhile purchase at the present time.
Of course, picking the right shares and the strategy to be successful in the stock market isn't easy. But you can get ahead of the herd by reading the Motley Fool's FREE guide, “10 Steps To Making A Million In The Market”.
The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide.
Peter Stephens owns shares of Hikma Pharmaceuticals and Rolls-Royce. The Motley Fool UK has recommended Hikma Pharmaceuticals. 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.