2 FTSE 100 shares with long-term investment potential

While the S&P 500 index recently entered a bear market, having fallen by more than 20% from its peak, the FTSE 100 index currently trades just 7% down on its high from earlier this year.

As a result, some investors may determine that there are better buying opportunities in the US than the UK, since the former’s prices could have fallen to more appealing levels.

However, with FTSE 100 stocks such as BP (LON: BP) and Reckitt (LON: RKT) offering good value for money based on their future prospects, UK-listed shares could be highly appealing for long-term investors.

BP

BP’s share price has bucked the wider stock market trend over recent months. It has gained 10% since the start of the year as rising oil and gas prices have boosted its financial performance. Indeed, its first quarter underlying profit increased by over 50%.

Despite this, the firm continues to trade on a very low valuation. For example, it has a forward price-to-earnings ratio of around 6. This suggests it has a very wide margin of safety that could mean further share price growth is ahead.

Clearly, the company’s future is highly dependent on energy prices that could prove to be volatile. In addition, political risk remains elevated. However, with the company’s financial position having improved via a 10% reduction in net debt in the most recent quarter, its capacity to overcome an uncertain economic and political period is relatively sound.

BP’s forward dividend yield currently stands at around 4.7%. Alongside this, it is engaging in a generous share buyback programme that could help to support its stock price performance. And with its plans to transition to cleaner forms of energy likely to benefit from an improving outlook for the wider sector, its long-term prospects appear to be relatively bright.

As a result, it could offer long-term investment appeal, albeit with high volatility likely in the short run.

Reckitt

Reckitt’s share price has marginally outperformed the FTSE 100 index since the start of the year. The global consumer goods company’s shares are down 4%, versus a fall of 6% for the index, despite the release of an encouraging set of first quarter results.

They showed an increase in like-for-like sales of 5.6%, as well as improving market positions across all business units. Indeed, over three quarters of the firm’s brands gained or maintained their market share during the quarter.

Reckitt’s range of strong brands provides it with a relatively high degree of pricing power that may allow it to more easily overcome a period of high inflation. It has also made asset disposals and acquisitions to increasingly focus its portfolio on higher margin brands that offer greater long-term growth potential.

Ecommerce provides an additional growth avenue for the firm. Its online sales grew by 13% in the most recent quarter and position it for growth in an era where digital retailing is widely forecast to become more prevalent.

Although a forward price-to-earnings ratio of 19 is significantly higher than the ratings of many other FTSE 100 index stocks, Reckitt’s long-term growth potential suggests it is worthy of its current premium.