Forget a Cash ISA! I’d buy this value FTSE 100 stock instead

“Cash is king,” one of my father’s favourite refrains, is certainly not one I would agree with when it comes to investing in 2019.

The best Cash ISA returns on offer at the moment are 1.5%, hardly what you would call royalty considering inflation levels currently sit at around 2%, so you will actually end up with less for your money when all is said and done.

An alternative to saving your money as cash is investing in stocks and shares, which are constituents of the UK’s blue-chip stock index, the FTSE 100.

Looking at the index as it stands, there is one particular company which I feel represents significant value in the long term.

Summer holiday

Tui (LSE:TUI) has seen its share price lose more than 57% of its value in the last 12 months as it struggles to deal with declining profits and the fallout from the grounding of the global Boeing 737 Max fleet.

Tui has 15 of the Boeing planes on its roster and another eight more on order, but the aircraft have been recalled following two fatal crashes and it is still uncertain when they will be operational again.

Considering recent underperformance however, I would now consider Tui’s share price of 730p as a buying opportunity.

While the short-term turbulence may well continue, I see major growth prospects in the coming years as the travel group expands its operations, and it should also benefit as the UK eventually moves away from Brexit-related turmoil.

With a current dividend yield of 8.74%, albeit aided by the falling share price, as it stands that is an attractive income if it can be maintained. One of the key questions is how long that yield can survive if profits continue to be elusive.

However, considering Tui is currently trading on a P/E ratio of 6.97 I would certainly consider it a bargain at this stage.

Increasing demand

All things considered, the group’s balance sheet is not in the worst state. At the end of its financial year, the company generally reports being in a net cash position, and while that record could be under threat this year following the reported setbacks, I see the long-term increase in demand for holidays eventually winning out.

Competitors such as Thomas Cook appear to be in a significantly worse position debt-wise, with analysts at Citigroup last month branding its shares “worthless”.

This year alone, Tui is expected to open at least 30 new hotels as part of its expansion, as well as increasing its fleet of cruise ships and holiday destinations, hardly a sign that the company is struggling.

Sure, the longer the Boeing issue rumbles on, the more profits will be hit, but once that and other headwinds are no longer a problem, I see Tui thriving on the back of strong demand and adept management.

While certainly not a sure bet, I’d buy Tui shares at their current price, considering the bumper dividend yield and long-term growth prospects.