The FTSE 100’s decline of 19% since the start of 2020 may cause some investors to consider buying Bitcoin or holding their capital in a Cash ISA.
While the virtual currency may offer high return prospects, significant risks such as a lack of fundamentals could mean that many investors are disappointed with its long-term performance.
Similarly, Cash ISAs may disappoint due to their low returns in an era when interest rates look set to remain close to zero in support of an economic recovery.
Therefore, buying cheap FTSE 100 shares, such as the two companies discussed below, after the recent market crash could be a better proposition from a risk/reward perspective. They may boost your portfolio’s returns and help you to retire early.
FTSE 100 consumer goods company Unilever (LSE: ULVR) reported a somewhat disappointing first quarter update recently. Due to coronavirus, its underlying sales growth in emerging markets fell to a negative 1.8%. Although this was offset by a rise in developed markets sales of 2.8%, the near-term outlook for the business in a period when containment measures persist could be challenging.
This may present an opportunity for investors to buy a high-quality business while investor sentiment is relatively weak and it offers a wide margin of safety. For example, the Unilever share price has fallen by 11% over the last year.
Long-term trends such as rising disposable incomes in emerging markets and a shift towards direct-to-consumer channels look set to persist over the coming years. This could benefit Unilever’s performance, and may enable it to deliver growth ahead of the FTSE 100’s returns. As such, now could be the right time to buy a slice of the business.
FTSE 100 miner Fresnillo
Another FTSE 100 stock that could offer good value for money at the present time is gold and silver miner Fresnillo (LSE: FRES). Its shares have gained 32% already this year. But rising demand for precious metals could provide it with strong operating conditions that enable it to deliver rising profitability.
In fact, the business is forecast to post a rise in its bottom line of 61% in the next financial year. With a price-to-earnings growth (PEG) ratio of just 0.4, it seems to offer a wide margin of safety that could produce high capital returns for investors.
Of course, Fresnillo has struggled with its operational performance over the last few years. This has caused its share price to lag those of its rivals at times. However, its recent updates have suggested that it is making progress in improving in this area, which could help to boost its profitability and investor sentiment over the long run.
Therefore, buying shares in the FTSE 100 company as part of a diverse portfolio of businesses could be a worthwhile move that helps to bring your retirement date a step closer.
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Peter Stephens owns shares of Fresnillo and Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Fresnillo. 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.