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Forget buy-to-let property. I’d buy these 2 bargain FTSE 100 stocks

Peter Stephens
Models of houses on top of pound coins

While the FTSE 100 may have experienced a decade-long bull market, it appears to offer better value for money than property.

Compared to average incomes in the UK, house prices are close to their highest ever level. This could mean that their scope to deliver capital growth is somewhat limited over the medium term.

By contrast, a number of FTSE 100 shares seem to offer wide margins of safety at the present time. Here are two prime examples that could be worth buying right now.

Aviva

The recent half-year results from insurance business Aviva (LSE: AV) highlighted the challenges it is facing in some of its markets. This has led to significant changes being put in place by the business. For example, it has separated its Life and General Insurance business divisions in the UK and merged its UK Digital and UK General Insurance operations.

These changes are aimed at improving the efficiency and financial performance of the business. Alongside them, Aviva is aiming to reduce its leverage to cut interest payments and strengthen its balance sheet ahead of what could be an uncertain period for the world economy.

Investors appear to be cautious about the company’s financial prospects. Evidence of this can be seen in its valuation, with Aviva’s shares currently having a price-to-earnings (P/E) ratio of just 7. This suggests that they offer a wide margin of safety that could lead to improving capital returns in the long run. As such, now could be the right time to buy a slice of the business as it puts into effect its revised structure and strategy.

Standard Chartered

Another FTSE 100 company that could face an uncertain outlook is Standard Chartered (LSE: STAN). The bank’s recent quarterly update, however, showed that the changes it has made to its business model in recent years are delivering profit growth. For example, its underlying profit before tax increased by 16% compared to the same quarter of the previous year.

Among the improvements being made to the business are productivity gains, as well as a focus on markets that have underperformed in previous years. Alongside a focus on efficiency and cost reduction, this could provide a growth catalyst for the bank in the coming years.

Standard Chartered is forecast to post a rise in its bottom line of 24% in the current year, followed by further growth of 16% next year. Since its shares have been somewhat volatile in recent months, they trade on a price-to-earnings growth (PEG) ratio of just 0.6. This suggests that they could offer good value for money relative to the wider FTSE 100.

With the bank being focused on geographic regions that could deliver high GDP growth rates over the long run, its financial prospects appear to be sound. As such, it could offer a favourable risk/reward ratio at the present time.

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Peter Stephens owns shares of Aviva and 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