The Motley Fool

Why I think £5,000 invested in these 2 cheap FTSE 100 stocks could help you retire early

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images.

Investing in FTSE 100 shares after the recent market crash may not yield a high return in the short run. The index could yet revert to a decline after its rebound. And investors may experience paper losses over the coming months.

However, in the long run, the FTSE 100 has the potential to deliver higher returns than other major asset classes. As such, now could be the right time to invest £5,000 in high-quality stocks.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

With that in mind, here are two large-cap shares that appear to offer favourable risk/reward opportunities for the long term.

Polymetal

Investor uncertainty has contributed to a rise in the price of gold in recent months, with gold miners such as FTSE 100-listed Polymetal (LSE: POLY) enjoying improving financial outlooks. As a result, its shares have risen by 34% since the start of the year.

Despite their rise, Polymetal’s shares continue to offer good value for money. They trade on a price-to-earnings (P/E) ratio of around 12. And the company is forecast to post a rise in net profit of 7% in the next financial year. This could prove to be a relatively strong rate of growth compared to the wider FTSE 100, and it may just lead to improving investor sentiment towards the business.

Looking ahead, the gold price may face a volatile period. There are uncertainties regarding when the global economy will return to a sense of normality following the lockdown. And this could impact on investor sentiment.

However, Polymetal offers defensive characteristics due to gold’s appeal as a store of wealth. And the company has a dividend yield of around 5% too. So it could be a profitable FTSE 100 investment over the coming years.

FTSE 100 retailer Morrisons

FTSE 100 retailers such as Morrisons (LSE: MRW) have experienced a challenging period during the lockdown. The company recently reported a rise in its like-for-like sales of 5.7% in the first quarter of the year. But it is likely to record significantly higher costs for the current year. For example, recruiting additional staff to meet high demand could raise its operating expenses and limit its profit growth potential.

However, Morrisons seems to be well placed to capitalise on changing trends within the supermarket industry. It continues to invest in its online operations, which could prove to be increasingly popular among consumers over the coming years. It is also expanding its presence in the convenience store sector. This may diversify the business away from large-scale premises that have generally become less popular over recent years.

Although Morrisons’ share price could experience a challenging period if the economy’s performance disappoints, the FTSE 100 company’s sound strategy and solid financial position may mean that it offers improving total return potential. As such, it could boost your portfolio’s performance and help you to bring your retirement date a step closer.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens owns shares of Morrisons. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.