The prices of gold and Bitcoin may have surged higher in 2019, but there could be better opportunities to generate high returns in the FTSE 100.
The index appears to offer a number of shares that trade on low valuations and which offer improving financial prospects. Buying a range of them now could enable you to boost your retirement prospects.
As such, now could be the right time to buy these two FTSE 100 shares. They appear to be undervalued based on their financial prospects.
The recent update from Rolls-Royce (LSE: RR) was somewhat mixed. Although it showed that the company is making progress in implementing its efficiency drive and free cash flow is on target to reach £1bn in 2020, issues with its Trent 1000 engine have persisted.
They have contributed to weaker-than-expected financial performance from the business, as well as deteriorating investor sentiment over recent months. This trend may continue in the short term, but the company expects the Trent 1000 issues to ultimately be resolved.
Looking ahead to the next financial year, Rolls-Royce is forecast to post a rise in its bottom line of around 45%. This puts the stock on a price-to-earnings growth (PEG) ratio of just 0.4, which suggests that it offers a wide margin of safety.
With demand for civil aircraft and defence-related products expected to rise over the long run, now could be the right time to buy the stock. It may experience further challenges in the short run that cause investor sentiment to decline. But for long-term investors, its low valuation and overall strategy could catalyse its share price performance.
Insurance business RSA (LSE: RSA) is another FTSE 100 share that could deliver impressive total returns in the long run. Its recent trading update showed that it is making progress in its aim to improve the customer experience. It has also delivered improved underwriting results, despite market conditions being competitive.
The stock is forecast to post a rise in net profit of 8% in the next financial year. Since it trades on a price-to-earnings (P/E) ratio of 12.1, it seems to offer good value for money at the present time when compared to its wider sector. This suggests that it may deliver a rising share price over the coming years.
Furthermore, RSA is expected to raise its dividends per share by around 11% in the next two financial years. This puts it on a forward dividend yield of 4.6% from a shareholder payout that is expected to be covered twice by net profit. Therefore, it could become increasingly attractive from an income investing standpoint, which may lead to greater investor demand for its shares. As such, now could be the right time to buy it as its growth and income investing prospects look set to improve.
Peter Stephens owns shares of Rolls-Royce. 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.