The FTSE 100’s recent market crash may cause some investors to buy other assets, such as Bitcoin, to increase their chances of retiring early. After all, the virtual currency has almost doubled since its March lows, while the FTSE 100 is up by just over 20%.
However, the FTSE 100 has a long track record of recovery from even its most challenging periods. Therefore, there’s a high chance it’ll go on to report strong total returns in the long run. This makes it a less risky — and potentially more rewarding — means of planning for your retirement than Bitcoin.
With that in mind, here are two FTSE 100 stocks that appear to be undervalued. Buying them in an ISA today could boost your long-term financial prospects.
FTSE 100 retailer Sainsbury’s
The recent results released by Sainsbury’s (LSE: SBRY) highlighted the uncertain trading conditions faced across the retail sector. The company stated that it’s too soon to accurately determine the impact of coronavirus on its financial performance in the current year.
As such, investors in the stock face an uncertain future. For example, it’s unclear when lockdown measures will end. Likewise, should the UK economy experience a prolonged period of high unemployment and slow growth, demand for the company’s products could come under pressure.
Despite this, the Sainsbury’s share price appears to include a margin of safety at present. It’s fallen by 18% since the start of the year, and could now offer good value for money. With the FTSE 100 company having a strong online presence and potentially set to benefit from business rates relief, it could deliver relatively strong financial performance over the long run.
Another FTSE 100 stock that could deliver impressive total returns in the coming years is Vodafone (LSE: VOD). Its recent results highlighted the improvements it’s making to its business model. Notably, it now has a three-year plan to accelerate its digital transformation. In doing so, it expects to reduce its costs by around €1bn.
Vodafone’s business model has proved to be resilient over recent months. For example, it reported a 3% rise in sales in its recent annual results, with profit increasing by 2.6%. This could make it a relatively popular stock among investors in a period where difficult operating conditions may negatively impact on the financial prospects for a wide range of businesses.
With a dividend yield of around 6.3%, Vodafone appears to offer income investing potential. It may also have a scarcity value in an era when many of its FTSE 100 index peers are reducing their dividend payouts to conserve cash. Therefore, the telecoms giant could well deliver impressive total returns over the coming years. And that could make now the right time to buy a slice of it in a retirement portfolio.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now spread to over 200 countries worldwide, the bull market we’ve enjoyed over the past decade has finally come to an end.
Against such a backdrop of market worry, it’s little wonder that many investors feel panicked. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
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Peter Stephens owns shares of Vodafone. 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.