Warning ISA investors! I think these FTSE 100 stocks could wreck your plans to retire rich

These FTSE 100 shares are trading at historical lows. But could they destroy your plans to retire rich? Royston Wild considers their investment cases.

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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As a shares investor myself I don’t fear stock market crashes. The key to successful investing is to buy and hold onto companies for a number of years. Such a strategy allows people like you and me the luxury of not worrying about temporary financial market volatility. It also improves our chances of being able to retire rich.

Market crashes always cause good-to-great stocks to plummet along with the bad. And this provides investors with the chance to buy into some choice bargains. But here ISA investors need to be hugely careful and not be seduced by rock-bottom earnings multiples and market-beating dividend yields. In many cases low valuations are a sure sign of dangerous stocks that could rob you of your wealth.

Happy retired couple on a beach

Retail woes

It’s often said that bricks and mortar investments are some of the safest out there. In some cases that couldn’t be more wrong, however. Just ask shareholders over at Intu Properties. This shopping mall operator has seen its share price erode 98% in the past 12 months as UK high street conditions have worsened. On Friday, struggles to collect rents and reduce its debt mountain caused Intu to fall into administration.

Glass-half-full investors might be looking at other retail property owners and their low valuations, though, and thinking now is the time to get in on the action. The easing of lockdown measures in the UK has improved the profits outlook for physical retailers and their landlords, right? Not if data from the Confederation for British Industry (CBI) is anything to go by.

Scary survey

A survey released by the CBI reveals the chilly outlook for the country’s retailers. The easing of Covid-19 quarantine measures meant that sellers of non-essential items reopened their doors on 15 June. But according to the study such retailers have “extremely negative” sales expectations and reckon trade next month will be worse than in July 2019.

A perceived lack of demand was the biggest worry for 62% of retailers. Workforce issues due to school closures, cost pressures, and transport difficulties were also cited as serious issues that could damage profits.

The key to retiring rich lies elsewhere

It’s on the cards that Britain’s non-food retailers face a torrid task beyond next month. A severe economic downturn threatens to keep consumers’ wallets firmly tightened well into 2021 at least. The threat posed by online retailers is one that overshadows the physical operators for much longer, too. Incidentally, that CBI report shows that despite the broader malaise in the broader retail sector, online sales are expected to grow at an even faster rate in July than in June.

For all these reasons, I’m happy to pass on FTSE 100 retail property giants Land Securities and British Land. Their historically low forward price-to-earnings ratios of 15 times don’t appeal to me considering their rapidly deteriorating profits outlook. They are in significant danger of going the same way as Intu, in my opinion. And so I’d rather buy other Footsie shares to help me retire rich.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co and Landsec. 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.

More on Investing Articles

Investing Articles

Should I still be cautious about Rolls-Royce shares?

Rolls-Royce shares are flying. But is now the time for this Fool to open a position? Here, he explains why…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Is the Diageo share price coiled to rebound?

Christopher Ruane explains why he remains bullish about the long-term outlook for the Diageo share price and would happily invest…

Read more »

Young Asian woman holding a cup of takeaway coffee and folders containing paperwork, on her way into the office
Investing Articles

How I could make a 10% yield for high passive income a reality

Jon Smith explains how he can target high passive income from top-yielding stocks, including one specific example he'd consider.

Read more »

Investing Articles

I’d buy 1,784 shares of this FTSE 100 stock to target £350 of monthly passive income

Muhammad Cheema takes a look at how British American Tobacco shares, with a dividend yield of 10.1%, can generate a…

Read more »

White female supervisor working at an oil rig
Investing Articles

1 ex-FTSE 100 stock that I think will get promoted soon

Jon Smith flags up an energy stock that used to be in the FTSE 100 and currently has strong momentum…

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

With an 8% dividend yield, I think this undervalued FTSE stock is a no-brainer buy

With an impressive yield and good track record of payments, Mark David Hartley is considering adding this promising FTSE share…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,500 in savings? Here’s how I’d try to turn that into £1,809 a month of passive income

Investing a relatively small amount into high-yielding stocks and reinvesting the dividends paid can generate significant passive income over time.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Dividend star Legal & General’s share price is still marked down, so should I buy more?

Legal & General’s share price looks very undervalued against its peers. But it pays an 8%+ dividend yield, and has…

Read more »