Investing in the FTSE 100 may seem to be a risky move at the present time. Global risks such as a trade war, as well as political uncertainty in the UK, could combine to negatively impact on the index’s performance over the short run.
However, in the long run its prospects appear to be relatively sound. The index contains a wide range of stocks that could offer good value for money. As such, its returns could be significantly higher than those of cash savings in an era in which interest rates are likely to continue at low levels.
With that in mind, here are two FTSE 100 shares that could offer long-term growth potential at the present time.
The travel and leisure sector has experienced a highly challenging few years. Weak consumer confidence has contributed to a difficult period for companies such as TUI (LSE: TUI), with its financial performance being relatively disappointing.
However, its recent update showed that it is delivering relatively resilient performance. Its vertically integrated business model seems to be performing better than many of its sector peers, while an increasing focus on becoming competitive on costs could strengthen its market position. Furthermore, the investment it is making in a digital offering appears to be catalysing its performance.
In the current year, TUI is expected to deliver double-digit earnings growth. Since it trades on a price-to-earnings growth (PEG) ratio of just 0.3, it appears to offer a wide margin of safety. This could translate into share price growth in the long run, although investor sentiment could be highly changeable in the near term.
Standard Life Aberdeen
Another FTSE 100 share that has experienced an uncertain period over the past few years is Standard Life Aberdeen (LSE: SLA). An uncertain outlook for the world economy has coincided with significant change for the business following its merger. The end result has been weak investor sentiment.
However, recent updates from the business have highlighted its long-term potential. Its half-year results showed that its investment in Asia and in launching new funds could strengthen its overall market position. Likewise, its acquisitions of UK wealth management businesses could catalyse its financial prospects, while investment in a UK savings ecosystem may enhance its financial performance.
While Standard Life Aberdeen’s share price may have made gains in recent months, it still has a dividend yield of around 7%. This highlights the margin of safety currently offered, as well as its income prospects. Although the world economy may experience a challenging near-term outlook, in the long run, the stock seems to be in a strong position to capitalise on its growth prospects. As such, now could be the right time to buy a slice of it rather than holding your cash in a savings account.
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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.