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Don’t know what stocks to buy? I’d buy cheap FTSE 100 shares in an ISA

These are perplexing times for FTSE 100 investors. Buy shares today and run the risk of them collapsing in value on Covid-19 worries? Or hold off and miss some of the ‘opportunities of a lifetime’ that we hear so much about?

It’s true that the macroeconomic and geopolitical landscape is fraught with danger. You don’t just need to consider the potential impact that the coronavirus could have on your investments. Mixed signals coming out of the White House on US-Chinese trade relations are another serious problem facing the world economy, and with them the outlook for global share markets.

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Could it be argued that these colossal risks are baked into the valuations of many FTSE 100 stocks though? I certainly believe so. There are clearly some possible short-to-medium term obstacles that investors need to consider. But there are many, many stocks which, despite these imminent uncertainties still have bright long-term futures. And at current prices many of them are too cheap to miss.

One FTSE 100 bargain

GlaxoSmithKline’s (LSE: GSK) one FTSE 100 stock that’s worthy of serious attention at recent prices. It trades on a forward P/E ratio of below 15 times and carries a dividend yield of 5% to boot, too.

Even the most risk-averse of investors should be attracted to Glaxo, I feel. Economic factors don’t alter the fact that medicines are essential commodities. Investors here don’t really need to worry about Covid-19 consequences, trade wars and the like.

Instead, shareholders can look forward to ripping profits growth over the coming decade as its bulging pipeline of blockbuster products delivers. Glaxo’s revenues jumped almost 20% in the first quarter as sales of products like Trelegy and Nucala rocketed. Soaring revenues pay tribute to the company’s focus on fast-growing therapy areas like respiratory, vaccines and oncology too.

The 9% dividend yield

Now, Direct Line Insurance Group (LSE: DLG) isn’t on the index of Britain’s top 100 shares. It came within a whisker of being promoted from the FTSE 250 in the most recent FTSE 100 reshuffle, however. And it could still be elevated to the prestigious blue-chip index before long.

I reckon the insurance giant is a top value share for both growth and income investors. As well as a forward P/E multiple of around 11 times, Direct Line sports a monster dividend yield just shy of 9%. It shares the same sort of near-term protection as Glaxo in that insurance demand doesn’t tend to falter significantly during economic downturns. In fact, in the case of motor insurance — the company’s single most important product segment — it’s something that we are legally obliged to buy whatever the weather.

But this isn’t why I’d buy Direct Line shares today. I’m encouraged by the huge investment it’s made in marketing its brands, a strategy that helped total gross written premiums rise 5% in the first quarter. And I like the insurer’s intense cost-cutting drive to create a leaner earnings-creating machine in the future.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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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