Gold and Bitcoin may have become more popular among investors due in part to their rising prices over the past year, but the FTSE 100 could offer superior growth potential.
In many cases, FTSE 100 members offer attractive valuations given their growth prospects. And with the world economy’s outlook being uncertain, now could be a good time to buy them while they offer favourable risk/reward ratios in many cases.
With that in mind, here are two large-cap shares that could deliver improving returns. They may prove to be better buys than gold or Bitcoin.
Online property listings company Rightmove (LSE: RMV) is expected to maintain strong growth in its bottom line, despite continued uncertainties surrounding the UK property market. For example, its net profit is due to increase by 7% this year and 8% next year.
Since the stock trades on a price-to-earnings (P/E) ratio of 30.4, it may lack a wide margin of safety. However, the trends within the property market of recent years may mean that the business is in a strong position to produce resilient growth that is worth paying a premium for.
Rightmove seems to have a sound growth strategy, with continued investment in new technology helping to differentiate it from potential rivals. Its market position has remained strong over recent years, while its past results have highlighted robust demand from agents and consumers for its services.
Therefore, while there may be far cheaper shares available in the FTSE 100, Rightmove’s solid track record of growth and its successful strategy could mean that it is worth buying now for the long term.
Another FTSE 100 share that could offer higher returns than gold and Bitcoin is BP (LSE: BP). Its most recent quarterly results highlighted challenging operating conditions, with lower gas prices impacting negatively on its profitability.
However, the company continues to gain ground with the implementation of its strategy. For example, it is investing in its downstream operations in faster-growing markets such as across Asia, while asset disposals could improve the risk/reward opportunities offered by its asset base.
BP is making changes to its senior management team, which could cause a degree of disruption in the short run. Investors, though, appear to have factored-in these changes, with the stock currently trading on a P/E ratio of just 12. Its bottom line growth forecast of 5% next year suggests that the stock is fairly priced, while its dividend yield of 6.5% could make it attractive to income-seeking investors.
Looking ahead, the stock could face further challenges should oil and gas prices offer lacklustre performances. However, with a high income return, a solid strategy and long-term growth potential, the company could deliver impressive total returns that allow it to beat the FTSE 100, as well as other assets such as gold and Bitcoin.
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Peter Stephens owns shares of BP. The Motley Fool UK has recommended Rightmove. 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.