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Have £2k to invest? I’d buy these 2 FTSE 100 shares today instead of having a Cash ISA

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The prospects for UK shares could improve following the general election. The threat of nationalisation and a radical economic policy under a Labour government has receded. This may mean that stocks with UK exposure become increasingly popular among investors.

As such, now could be the time to buy these two FTSE 100 stocks. They appear to offer low valuations and improving growth outlooks. They could deliver significantly higher returns than a Cash ISA over the coming years.

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The recent half-year results from BT (LSE: BT.A) highlighted the progress being made in delivering the company’s strategy. It continues to modernise its operations through a transformation programme that is expected to yield total benefits of £1.1bn. It has also continued to roll out 5G across a variety of UK locations, while launching a range of new products in its consumer and business segments.

Looking ahead, BT is forecast to post a rise in net profit of 3% next year. This would represent a significant improvement on its recent performance. Its price-to-earnings (P/E) ratio of 8.5 shows that it may trade at a discount to its intrinsic value. With political risk having fallen following the election, it could warrant a higher rating.

Clearly, the company’s share price turnaround is likely to take time. However, it seems to be making operational progress that could lead to financial improvement in the coming years. With a dividend yield of 6%, its total returns could be impressive after what has been a challenging period for the business. As such, now could be the right time to buy a slice of it for the long run.

British Land

Another FTSE 100 share that has experienced an uncertain period is real estate investment trust (REIT) British Land (LSE: BLND). Its financial performance is being negatively impacted by changes to the retail sector, with e-commerce contributing to a slowdown in demand growth for retail units.

This has prompted the company to reduce its exposure to the retail segment in favour of faster-growing areas such as flexible office space. They could catalyse British Land’s financial performance, as well as investor sentiment, as the prospects for the UK economy potentially become increasingly positive following the general election.

The stock currently trades on a price-to-book (P/B) ratio of just 0.7. This suggests that it offers a wide margin of safety – especially as it looks set to experience improved performance from a pivot to faster-growing property segments.

With a modest level of gearing and the company set to benefit from low interest rates, it could continue to generate robust levels of profitability that cause investors to become more optimistic about its outlook. As such, it could prove to be a recovery opportunity following its gradual share price decline in recent years.

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Peter Stephens owns shares of British Land Co. The Motley Fool UK has recommended British Land Co. 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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