The FTSE 100 may have gained 12% in 2019, but it continues to offer long-term growth potential. As such, it could prove to be a better investment than buy-to-let property. Tax changes, high house prices and the prospect of rising interest rates may hold back the returns available for landlords in the coming years.
With that in mind, here are two large-cap shares that appear to offer good value for money. They could produce rising share prices, while also offering increasing dividend payouts. As such, they may improve your retirement prospects.
easyJet (LSE: EZJ) and its sector peers have endured a challenging period, which has included weak demand from consumers and operational disruption. As such, its financial performance over the past few years has been disappointing.
However, the company is implementing a revised strategy that is expected to boost its financial prospects. It is cutting costs, investing in improving customer service levels and is maintaining its strategy of building a stronger position at major airports that are likely to see passenger growth over the long term.
This plan seems to be working. easyJet is forecast to post a rise in net profit of 15% in the next financial year. Despite this, the stock trades on a price-to-earnings growth (PEG) ratio of just 1.1. This indicates that it offers a wide margin of safety – especially when compared to the wider FTSE 100 to which it once again belongs, having dropped down to the FTSE 250 for six months in 2019.
Although the nature of easyJet’s industry means that its profitability is cyclical, it seems to offer a low valuation and long-term growth potential that could lead to a higher share price.
Also offering long-term total return potential is Standard Chartered (LSE: STAN). The bank’s recent updates have shown that it is making progress in improving productivity and addressing low returns in some of its markets. This led to a 16% rise in underlying profit in its most recent quarter, which suggests that it has the capacity to outperform many of its FTSE 100 banking peers.
Standard Chartered is investing in its digital operations as it seeks to improve its competitive advantage. It is also seeking to grow its affluent business segment, which could offer long-term growth potential in a number of key markets.
With the bank forecast to post a rise in its bottom line of 16% in the current year and next year, it seems to have a solid growth strategy. Since it trades on a PEG ratio of just 0.8, it appears as though investors have not yet factored in its outlook through a higher share price. This could make now the right time to buy a slice of the business, with its operating environment having the potential to improve over the coming years.
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Peter Stephens owns shares of easyJet and Standard Chartered. The Motley Fool UK has recommended Standard Chartered. 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.