The prospects for UK shares over the next decade could be relatively positive. After all, indexes such as the FTSE 100 and FTSE 250 have generally produced impressive growth over the long run.
As such, buying attractive British shares today could be a shrewd move. They may offer higher return prospects than popular assets such as Bitcoin.
With that in mind, here are two FTSE 100 shares that appear to me to offer long-term growth potential at a reasonable price.
An undervalued FTSE 100 stock relative to other UK shares?
While many UK shares have rebounded following the 2020 stock market crash, HSBC’s (LSE: HSBA) share price continues to trade 35% lower than it did at the start of the year.
I hold HSBC shares even though the bank’s near-term prospects continue to be very uncertain. A low interest rate environment and a weak economic outlook contributed to an 11% decline in its third-quarter revenue.
However, HSBC is making changes to its business that could improve its long-term performance relative to other UK shares. For example, it is shifting investment away from interest-rate-sensitive business lines towards fee-generating businesses. It is also focusing investment on Asia, where growing demand for banking services could act as a catalyst on its financial performance.
The bank is continuing to cut costs as it seeks to become more efficient. This could have a positive impact on its bottom line over the coming years. With it trading on a forward price-to-earnings (P/E) ratio of around 11, it seems to offer a wide margin of safety that accounts for the uncertain near-term operating conditions faced by the banking sector. As such, it may offer good value for money.
A growth opportunity among cheap stocks?
Kingfisher (LSE: KGF) has experienced a very different 2020 than many other UK shares. Its stock price has surged 33% higher since the start of the year, and in doing so it has outperformed the FTSE 100.
The retailer’s sales have gained ground as a result of resilient demand within the DIY sector. It has also benefited from having a strong online position during the pandemic. This resulted in a 17% rise in sales in the company’s most recent quarter.
Looking ahead, Kingfisher is forecast to post a 38% rise in earnings in the current year due to resilient demand for its products. It appears to offer good value for money, since it trades on a forward P/E ratio of 11.
Clearly, factors such as weak consumer confidence and an uncertain economic outlook could weigh on its performance relative to other UK shares. However, with plans to become more efficient and further develop its online operations, Kingfisher’s potential to deliver capital growth in the long run seems to be relatively high and has me interested. I think it may continue to outperform the FTSE 100 over the next decade.
Peter Stephens owns shares of HSBC Holdings. The Motley Fool UK has recommended HSBC Holdings. 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.