Forget a Cash ISA: I’d buy these 2 FTSE 100 stocks today instead

These two FTSE 100 (INDEXFTSE:UKX) shares seem to offer higher return prospects than a Cash ISA.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

sdf

While interest rate rises are forecast over the coming years, the speed at which they increase is expected to be rather pedestrian. As such, savers may experience negative real-terms returns from having Cash ISAs.

This could make the prospects for the FTSE 100 even more appealing. The index also appears to offer good value for money at the present time, with a number of large-cap stocks having growth potential and attractive valuations.

Therefore, now could be the right time to focus on these two FTSE 100 stocks. They may have experienced a turbulent summer in terms of their capital returns, but in the long run, their risk/reward ratios appear to be enticing.

Should you invest £1,000 in Barratt Developments right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barratt Developments made the list?

See the 6 stocks

RBS

The latest results from RBS (LSE: RBS) showed that economic uncertainty is weighing on its financial performance. It is, therefore, unlikely to meet its cost:income ratio and return on tangible equity targets for 2020.

While disappointing, the bank is expected to deliver on its targets over the medium term, with its recent interim results highlighting the cost savings that are currently being delivered. And, while the cost of PPI claims could prove to be higher in the short run than previously expected due to a surge in claims as the August 2019 deadline approached, the long-term prospects for the bank could be more positive than its valuation suggests.

In fact, RBS currently trades on a price-to-earnings (P/E) ratio of just 7.5. Alongside a forward dividend yield of 6% that includes special dividends, its income and capital return potential over the long run could be relatively high.

Certainly, continued economic uncertainty may weigh on its financial performance in the near term. But, with the UK economy forecast to grow by 1.4% in the current year and 1.3% next year, the bank’s financial prospects may be more encouraging than its share price suggests.

Rightmove

Having fallen by around 7% in the last three months, online property listings business Rightmove (LSE: RMV) could experience a period of uncertainty. Although house price growth does not directly impact on its financial performance, a slowdown in the property market could cause investor sentiment to decline to some degree over the coming months.

This, though, could present a buying opportunity for long-term investors. Rightmove has a dominant position in what remains a lucrative market that is expected to become increasingly popular as digital channels gradually become a more dominant part of the wider estate agency industry.

Since the stock is forecast to post a 13% rise in its bottom line in the current year, its outlook is relatively positive. It has recorded double-digit earnings growth in every one of the last five years, which suggests it has a solid strategy and a degree of consistency in what is an uncertain wider housing industry. As such, now could be the right time to buy it following its recent share price pullback.


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.

Peter Stephens owns shares of Royal Bank of Scotland Group. The Motley Fool UK has recommended Rightmove. 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

ISA coins
Investing Articles

Can funds like this help ISA investors retire with a large passive income?

Exchange-traded funds (ETFs) can be powerful weapons in helping ISA and SIPP investors build wealth for retirement.

Read more »

ISA Individual Savings Account
Investing Articles

With a yield of up to 6%, could this bank help a Stocks and Shares ISA generate £10,000 of passive income a year?

A Stocks and Shares ISA is a popular way of saving for retirement. But how much would be needed to…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

This FTSE 250 trust is easily beating the global index in 2025. Time to buy?

One global FTSE 250 investment trust has been turning things round recently, with a handy bit of outperformance. Ben McPoland…

Read more »

Bournemouth at night with a fireworks display from the pier
Investing Articles

Is the fizz about to go from the Coca-Cola HBC share price?

The world’s most popular drink’s hitting the headlines again. Our writer considers whether there are any implications for the Coca-Cola…

Read more »

Portrait of a boy with the map of the world painted on his face.
Investing Articles

3 top FTSE 250 investment trusts to consider buying today 

This trio of high-quality trusts from the FTSE 250 index would give a Stocks and Shares ISA portfolio a truly…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Another strong set of results from this FTSE 100 telecoms company. Time to buy?

The FTSE 100’s Airtel Africa released its first-quarter earnings yesterday (24 July). Our writer’s been taking a closer look at…

Read more »

A quiet morning and an empty Victoria Street in Edinburgh's historic Old Town.
Investing Articles

The Rightmove share price is too hot… a pullback could be coming

The Rightmove share price has pushed above the consensus share price target. And while analysts are often wrong, this could…

Read more »

Branch of NatWest bank
Investing Articles

With the bank’s income, margin and earnings higher, the NatWest share price continues where it left off!

Post-pandemic the NatWest share price has been the third-best performer on the FTSE 100. Our writer looks at the bank’s…

Read more »