Bitcoin’s 30% decline in the last four months highlights the volatility of the virtual currency. Of course, investors have no way of knowing whether it now represents good value for money, since it has no fundamentals.
Therefore, the risk involved in buying Bitcoin remain high. This could mean the FTSE 100 offers a superior risk/reward opportunity at present, with many of its members currently trading on wide margins of safety.
With that in mind, here are two large-cap shares that appear to offer good value for money, as well as long-term growth potential that could help you to make a million.
Emerging market-focused bank Standard Chartered (LSE: STAN) reported an improving financial performance in its recent third quarter results. Its underlying profit increased by 16% compared to the same quarter of the previous year, with its strategy of improving productivity and delivering an increasingly digital experience for customers appearing to pay off.
Looking ahead though, the bank faces a period of uncertainty. Many of the markets in which it operates could experience a slowdown in their growth rates as a result of the multitude of risks facing the world economy. They include a global trade war and political risks in Europe that could negatively impact on global GDP growth.
However, with Standard Chartered currently trading on a price-to-earnings (P/E) ratio of just 11.5 and is forecast to produce earnings growth of 16% next year, it could deliver strong capital growth over the medium term. As such, now could be a good time to buy it, while still offering a wide margin of safety, relative to other large-cap banking stocks.
The recent share price performance of airline company IAG (LSE: IAG) has been highly encouraging. It has risen by 25% in the last three months, despite the wider sector facing a period of uncertainty due in part to weak consumer confidence in the UK and Europe.
Furthermore, the company has faced industrial disputes and higher fuel bills in its most recent quarter that combined to reduce its profitability. This is expected to contribute to an 11% decline in its net profit in the current year.
However, with IAG’s shares currently trading on a price-to-earnings growth (PEG) ratio of just 0.7, it seems to offer growth at a reasonable price. This suggests its shares have the potential to move significantly higher without becoming overvalued.
Certainly, there may be challenging trading conditions ahead. The eurozone economy’s growth rate has slowed, while the UK faces a period of political uncertainty that may weaken consumer confidence. But from a long-term perspective, IAG’s margin of safety and its market position mean now could be a good time to buy a slice of it for the long term. It could offer less risk and greater returns than Bitcoin over the coming years.
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Peter Stephens owns shares of Standard Chartered. The Motley Fool UK has recommended Standard Chartered. 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.
Motley Fool UK 2019