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Have £10k to invest in FTSE 100 stocks? I’d buy these 2 bargain shares in an ISA today

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The FTSE 100 has rebounded by over 20% since reaching less than 5,000 points in March. However, there continues to be a number of large-cap shares that appear to offer good value for money following the market crash.

Certainly, they face significant risks. For example, a second wave of coronavirus could cause investor sentiment and economic activity to weaken.

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However, over the long run, shares such as the two FTSE 100 businesses discussed below could offer improving total returns. Especially when purchased in a tax-efficient account such as an ISA. Therefore, now could be the right time to invest £10k, or any other amount, in them.

FTSE 100 consumer stock Burberry

Lockdown measures introduced over recent months have had a major impact on the financial performance of FTSE 100 luxury fahion house Burberry (LSE: BRBY). Its recent annual results highlighted a 27% decline in comparable sales for the final quarter of its financial year. This was due to around 60% of its stores being closed.

Looking ahead, the gradual reopening of the retail sector could lead to improving trading conditions for the business. Prior to coronavirus, it was making encouraging progress in delivering on its new strategy. For example, it’s been able to transform its social media presence. An increasing focus on environmental issues also appears to be resonating with customers.

As such, Burberry could offer long-term growth potential after what has been a hugely challenging period for the FTSE 100 business. It has reduced its dividend and sought to become more efficient in response to weaker trading conditions. The strength of its brand means it may offer long-term recovery potential after its 28% share price decline since the start of the year.

British American Tobacco

Another FTSE 100 company that could post a share price recovery is British American Tobacco (LSE: BATS). Its recent trading update was somewhat mixed, experiencing little change in demand across a large proportion of its markets. However, the business also suffered weaker sales in some countries where lockdown measures have been in place.

Despite this, the overall share price performance of British American Tobacco has been relatively resilient over recent months. Its adjusted revenue for the 2020 financial year is expected to grow by between 1% and 3%. It’s reaffirmed its commitment to a 65% dividend payout ratio. With its shares currently yielding 7.4%, it could become a more popular income share while interest rates are at historic lows.

Although the FTSE 100 company has pushed back its target to generate £5bn in revenue from next-generation products to 2025, its pricing power in tobacco products could lead to a robust and growing bottom line. During an uncertain period for the world economy, it could offer a relatively attractive total return in the coming years. And I think that makes it a worthwhile investment at the present time.

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Peter Stephens owns shares of British American Tobacco. The Motley Fool UK has recommended Burberry. 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.

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