The FTSE100‘is a great place to look for shares at bargain prices. Blue chip shares on the London share market have significantly underperformed in recent years, reflecting frail economic conditions and political turbulence in the UK.

Investors need to be careful before investing in economical stocks, though. Some of the low-cost aristocrats in the FTSE 100 have delivered excellent returns in recent years. However, their current frail valuations reflect the challenges they face going forward.

These are two Footsie legends I won’t touch with a stick next month.

Tesco

You would think Tesco (LSE:TSCO) could be set for a profit boost as the UK’s population grows rapidly. In theory, more mouths to feed should translate into higher grocery sales, not to mention greater demand for the company’s non-edible products.

The Office for National Statistics estimates that in the 15 years to 2036 the UK population will escalate by 9.9% to 73.7 million.

The problem is that competition in the supermarket sector is extreme and growing rapidly. And it is not only the scourge of German discounters that poses a threat to Tesco’s profits.

In recent days, Retail Newspaper announced that fellow mid-market retailer Morrisons is planning a significant expansion of its own store network, opening 400 recent Morrisons Daily convenience stores, taking the total to 2,000 by 2025.

Tesco’s performance against its rivals has been more promising recently. Its market share actually rose by 52 basis points to 27.6% in the three months to May 25. But it may struggle to maintain that momentum as its rivals grow rapidly, drawing in Tesco customers and prompting it to cut prices.

Tesco shares currently trade at a forward price-to-earnings (P/E) ratio of 12.2 times. Even though the result is well below their five-year average of 20.3 times, I still leave the supermarket on the shelf today.

Lloyds

I also intend to continue giving Lloyds Banking Group (LSE:LLOY) has a wide run. On paper, Black Horse Bank offers even better value than Tesco shares. The investment is based on a forward price-to-earnings (P/E) ratio of 8.7 times. And the dividend rate for 2024 is 5.7%, which is a record on the market.

Signs of a steady recovery in the housing market bode well for Lloyds, the UK’s largest mortgage lender. Things could get even better as interest rates (likely) fall later in the year.

Overall, however, I think the outlook for retail banks is pretty bleak. Interest rate cuts will squeeze margins on lending. Meanwhile, long-standing structural problems in the UK economy could limit profit growth.

Like Tesco, the company faces increasing competition, in this case from challenger banks such as Monzo and Starling Bank.

Finally, Lloyds also faces significant charges if it is found to have mis-sold motor finance products. It has already been hit with a £450m charge, a worrying reminder of the hugely pricey PPI scandal of the 2010s.

There are currently many shares available on the FTSE 100 at discounted prices. So I’m not tempted to take a risk with high-risk Tesco or Lloyds shares.