Abrdn (LSE:ABDN) shares have had a difficult year. The asset manager began 2022 buoyed by improving financials only to be hit by sky-high inflation and the worsening economic outlook of the UK. 

In the first half (H1) of 2022, the firm recorded a total pre-tax loss of £320m. Fee-based revenue dropped 8% to £696m and adjusted operating profits fell 28% to £115m. 

As a result, Abrdn shares are down 47% in 12 months and 42% so far in 2022.

This prompted a demotion from the FTSE 100 in September and the investment firm is now a part of the mid-cap FTSE 250 index. 

But things could be changing. Abrdn shares are up 8% in the last week. Could this beaten-down stock present a mixture of growth and value, factoring in this historic decline and the 10.7% dividend yield? Let’s find out. 

Cheap or a value trap?

Most shares that fall nearly 50% in a year will appear cheap on paper. Looking at the performance of Abrdn shares performance over time, it is clear that the firm has declined steadily since hitting an all-time high of 571p in 2015.

The company has undergone many changes over the last decade, including a merger and subsequent sale of the Standard Life business, several high-profile boardroom changes, and a rebranding effort.

Most investment firms are struggling at the moment. The larger economic collapse in the UK has caused trading volumes to drop. 

This marketwide pullback caused Abrdn’s assets under management (AUM) to fall £34bn in H1 2022. Despite this, the company has managed to hold on to its position as one of the largest asset managers in the UK. 

And I think the latest collapse in Abrdn shares is primarily due to current market conditions rather than a failing business model. This is why I still hold on to my opinion that it is a bargain right now.  

Positives and verdict

Abrdn has been a consistent dividend payer for over 15 years now. In July 2022, the company managed to roll out a share buyback worth £300m. The board also announced its plans to return £500m to shareholders after the firm was removed from the FTSE 100 last month. 

The firm has also changed how it uses excess cash. While many analysts questioned the acquisition of Interactive Investor for £1.5bn, the firm has also been shedding excesses to generate more cash. 

Heading into H2 2022, the investment firm sold two of its stakes in HDFC for about £500m. The company also sold £300m worth of Phoenix Group shares to fund the aforementioned share buyback program.  

This makes me optimistic that the company plans on maintaining a decent dividend going forward. While the current yield of 10% might be unsustainable given falling profits, I think the annual yield will remain higher than the FTSE 100 average of 3.5%. 

When the economy recovers, I expect large asset managers to recover quickly. Given its current sky-high yield and history of shareholder returns, I think Abrdn shares currently offer a nice mix of growth potential and value. I am wary of further economic turmoil in the UK, which is why I am looking at a £1,000 lump sum investment when conditions stabilise. 

The post Up 8% in a week! Can beaten-down Abrdn shares make a comeback?  appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

The Lloyds (LSE:LLOY) share price is suffering along with other top finance shares in the UK. Rampant inflation is forcing global economies to raise interest rates. Today, news broke that the US government is considering another increase after it rolled out its largest hike in 28 years just last month. Here in the UK, the Bank of England has suggested that inflation could hit 11% in October.

And now, a new Covid lockdown in China is rekindling concerns from 2021. This could trigger another mini-collapse, causing shares to dip further. But I think preparing for a crash is the best investing strategy I have learnt in the last two years. Given the current economic climate, should I consider adding cut-price Lloyds shares to my portfolio if markets slide further? 

The bull case 

Yes, interest rate hikes mean banks will generate more cash on past and future loans. And for Britain’s largest lender, this is a welcome boost. And the recent analyst estimates for Lloyds look flat but I also see some positives. 

Currently, the estimates suggest that overall annual revenue from 2022-26 will remain between £4.5bn and £4.7bn. This tells me that the overall cash flow could remain stable, which is a good sign for Lloyds’ dividend. And Lloyds shares receive high investor interest throughout the year, largely thanks to its robust 4.75% dividend yield. 

Another positive I see over the next few years is an increase in business loans. Historically, periods of inflation have led to higher rates of borrowing among small and medium-sized businesses. And this ties in well with free cash generated. The Lloyds dividend has an earnings cover of 3.7 times, which is a strong sign that the company can sustain its current yield. And given the estimates for the next few years, I think I can expect a steady payout from Lloyds shares, which would make it a bargain on paper.

The bear case

While banking stocks stand to earn from more than one source, increased interest rates are not a good sign for the UK economy. Consumer goods brands are already seeing smaller baskets and measured spending as budgeting becomes a priority. And the housing boom in the UK looks like it is slowing down. This is bad news, particularly for Lloyds shares. 

We could just be entering a cyclical housing bear market in the UK after a decade of high demand. Lloyds bank earns a major chunk of its revenue from housing mortgages and it also recently invested in residential plots in the UK. This move could easily backfire with a housing collapse. And the Lloyds share price could fall as a result, which puts my investment at risk of falling into a value trap. 

The current instability is a big red flag for me and is keeping me from investing in any finance share in the FTSE 100. Yes, I think Lloyds is a strong business that will continue to generate cash for the foreseeable future. But other exciting areas are cropping up in the UK that could be better for my portfolio. I am looking at some top UK energy and tech shares right now. And I am steering clear of Lloyds and other finance stocks at the moment while looking for signs of a recovery.

The post At 42p, are Lloyds shares a bargain or a value trap? appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

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PayPal managed to surpass expectations with a growth rate of 8% year on year (Y/Y), as revenue came in at $6.5bn. Its earnings per share (EPS) was also in line with consensus, at $0.88 on a non-GAAP basis. Additionally, total payment volume (TPV) was up 15% Y/Y. The number of transactions per account was also up 11% on annual basis. Moreover, the fintech company added 2.4m net new active customers. PayPal’s Venmo business also saw a 12% increase Y/Y in TPV. These are all good signs.

A price to pay

While the figures for Q1 were great, the numbers behind the curtain make me worry as an investor. PayPal saw a 32% decline in free cash flow as the company incurred a -$0.20 EPS loss from lower transaction margin dollars from eBay. This was made worse by a loss from taxation (-$0.07 EPS) and credit losses (-$0.06 EPS). As for the elephant in the room, Russia, the loss of revenue from the region created a -$0.03 EPS loss from the suspension of transactional services.

To make matters worse, PayPal’s assets decreased as liabilities went up. Although the firm’s balance sheet is still in a rather healthy state, it could take a wrong turn if finances are not managed efficiently. The imminent departure of CFO John Rainey may not help.

More importantly, PayPal saw its take rate continue to decline along with its transaction margin losing 5%. Take rate is the percentage PayPal takes from each transaction as a form of commission, and is its main stream of income. With competition rising from other fintech companies such as Block and Wise, PayPal has been forced to lower its take rate to stay relevant. Although the discounted take rate has encouraged transaction volume, it’s only a matter of time before it starts impacting profit margins further.

Blue chip

On the brighter side of things, there are a couple of expansions that should help PayPal’s traffic. The introduction of PayPal Later in Japan and Germany, as well as Savings to PayPal Wallet in the US should bring some much needed momentum to PayPal’s growth. Nevertheless, 8% earnings growth isn’t ideal for a supposed growth stock.

So, is the PayPal growth story over then? It could be. The biggest fintech company in the world continues to lose market share to its peers. Venmo, seems to be the firm’s only growth prospect, but a TPV growth rate of 12% isn’t going to boost the PayPal share price to its highs of $300 anytime soon. Not to mention, the firm refuses to disclose the proportion of income it generates from its respective businesses in greater detail, which leaves me concerned as a shareholder, as this usually means that revenue isn’t meaningful enough. As such, I will be holding to see what comes of the Amazon partnership later this year.

The post PayPal earnings matches Q1 estimates. What now? appeared first on The Twelfth Magpie.

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John Choong owns shares of PayPal at the time of writing. The Motley Fool UK has recommended PayPal Holdings. 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.

New rules

The FCA wants to introduce new rules to protect retail customers from making unexpected losses from risky bets on the financial markets. The proposed measures include standardised risk warnings, mandatory profit-loss disclosures, limits on leverage and the curbing of account opening bonuses.

These rules weren’t aimed at IG or CMC, as they have been seen to have better practices in place for recruiting new clients and have tended to operate at the higher end of the market. Nevertheless, both IG and CMC will still be hard hit by the implementation of the proposed new rules. That’s because the outcome of the FCA’s proposed rules would be a much smaller CFD market, in which there will be no winning firms.

Not so bad?

That said, it’s not unusual for a regulator to sound tough initially, but later succumb to industry pressure — look at the Competition and Markets Authority’s (CMA) recent decision to reverse a previous ruling by Ofgem to compel price comparison websites to show all energy deals on offer. The FCA is currently still in the consultation phase, and is unlikely to make a final decision until late 2017.

Moreover, regulation may not entirely be a bad thing for IG and CMC. Stricter rules tend to encourage industry consolidation, as new rules generally hit the smallest firms hardest. This could help bigger firms to grow market share, gain benefits of scale and boost profitability.

Also, the proposed new rules may improve client outcomes and help the industry to sustain a larger active client base. Spread betting firms spend loads of money chasing new customers because some 80% of their retail clients lose money – if fewer clients lose money, maybe firms could find it easier to keep their existing ones.

Tough trading

Unfortunately, CMC Markets hadn’t been having it easy even before the latest FCA proposals. It listed on the London Stock Exchange in February this year at an IPO price of 240p a share, but for much of the time it has been trading, the shares were valued at less than its IPO price.

The company’s shares plunged in September after it warned low levels of volatility were causing client trading activity to fall. And last month, CMC reported a 29% decrease in earnings per share for the six months to 30 September 2016, as the value of trades fell 18% to £911bn.

That said, there’s good news too. CMC was able to continue to grow its client base, with the number of active clients up 8% to 47,623, while client assets rose a staggering 32% to £283m. This implies that clients were indeed finding fewer trading opportunities and haven’t abandoned their accounts at CMC. The worst may not be over, but not everything points towards more downside.

Right now, shares in CMC trade at 7.3 times its expected 2017 earnings, which is significantly below IG’s forward P/E of 10.2.

The post Is the worst over for these spread-betting stocks? appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Was the best investment I ever made a high-interest bond with a multi-year lock-in clause? No, but I have done a few of those.

Did I invest in fine wine, art, or antiques, perhaps? No. Those areas are beyond my circle of competence.

An old-fashioned idea

The best investment I ever made for sheer life enhancing benefit and feel-good effect was one I completed around 11 years ago — I paid off my mortgage.

Well-accepted investing advice is that it is a good idea to pay down any debts we might be carrying before putting money into other investments, such as shares on the stock market. There is much less agreement on whether those debts should include the mortgage carried on our homes.

I took an old-fashioned approach to the problem and viewed personal debt — all personal debt — as undesirable. Investing my money into paying down my debts, and therefore stopping an outflow of interest at whatever percent, was as good as investing my money and earning whatever percent, I reasoned.

Investing bliss

I found that reducing my spending, debts and outgoings was even better than earning more because I then had the choice of not working so much. Perhaps that benefit is often overlooked by folks when doing their financial planning.

In a mortgage-free and rent-free world, I find the bucks I earn have much more bang than they used to. My personal fixed-cost base is set very low, so my monthly earnings quickly build to ‘profit’.

‘Not working so much’ is one salubrious possibility when we go mortgage-free. We can then hang onto that feel-good lifestyle by living below our means. That is something that becomes easier to do in a mortgage-free world, because our means are greater than they used be when saddled with hefty mortgage repayments.

Targeting mortgage freedom

I consider paying off my mortgage the best investment I ever made and it is an investment that pays ongoing life-style dividends. You can probably do it, too.

For those that own their own home, I would argue that investing regularly on paying down mortgage debt is the best work/life investment available.

One way of achieving a mortgage-free lifestyle could be to:

1) live below your means so that there is money left over at the end of every month.

2) use the leftover money to pay off any non-mortgage debt, thus further reducing outgoings,

3) when you have cleared all other debts, start paying more money than you must, to pay down your mortgage.

It might be worth talking to your mortgage provider before proceeding with accelerated mortgage repayments to make sure that there are no built-in early repayment penalties in your mortgage contract. If there are not, what are you waiting for? If there are onerous clauses, it might be time to renegotiate terms with your mortgage provider or switch to another.

The post The Best Investment I Ever Made — And You Can, Too! appeared first on The Twelfth Magpie.

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Looking ahead, with Santander relying on Europe for 53% of its earnings, the improved economic situation within the Eurozone could boost its future performance. With the ECB undertaking to increase quantitative easing should the current programme prove to be inadequate, Santander’s future could be relatively bright. And, with the UK now being its major market, the improving UK economy is likely to have a positive impact on its income moving forward.

Meanwhile, Santander’s efficiency continues to be highly impressive, with its cost:income ratio standing at just 47%. And, with its common equity tier 1 ratio rising to 9.85% in the quarter, it continues to make progress regarding its financial standing.

Surprisingly, Santander trades on a price to earnings (P/E) ratio of just 10, which indicates that there is significant upward rerating potential. Furthermore, it is forecast to increase its bottom line at a similar rate to the wider index in the next two years, with growth of 5% this year and 7% next year being pencilled in. So, while Brazil is likely to continue to cause the bank a number of short term challenges (such as above average loan defaults and a lack of new business), Santander appears to be a strong long term buy.

Meanwhile, asset manager Henderson Group (LSE: HGG) also released an encouraging update today. It has reported net inflows of £1.3bn in the most recent quarter, with over 80% of its funds outperforming over the last three years. However, with global stock markets experiencing major falls during the quarter, Henderson’s assets under management have declined by £600m to £81.5bn, which means that its fees have also fallen.

Clearly, this is disappointing, but is a fact of life for asset managers who benefit from rising markets and experience reduced incomes during downturns. Looking ahead, Henderson expects the level of regulatory oversight to intensify and, with the outlook for the global economy being uncertain, it would be of little surprise for its financial performance to come under pressure in the short run.

However, in the longer term it has real upside potential. For example, Henderson trades on a price to earnings growth (PEG) ratio of just 1.2, which indicates that its shares offer good growth prospects at a reasonable price. And, with it yielding 4% from a dividend which is covered 1.6 times by profit, it appears to be a sound income play, too.

The post Do Q3 Results Change The Outlook For Banco Santander SA & Henderson Group Plc? appeared first on The Twelfth Magpie.

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• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Today, half-year results are out for test & inspection service provider Intertek Group (LSE: ITRK) defence industry supplier Ultra Electronic Holdings (LSE: ULE) and financial software company Fidessa Group (LSE: FDSA).

Bouncing back

Fears about a weak oil price environment dragging on Intertek Group’s profitability seem over-blown. The shares were weak during 2014, but look perky this morning, perhaps indicating the path of least resistance may now be ‘up’.

Compared to a year ago, the firm’s fist half saw revenue rise 3.5%, adjusted cash from operations grow 14.4%, adjusted earnings per share up 6.7%, which all helped a 6.3% hike in the dividend.

Such figures don’t come from a firm on its knees. The directors reckon the global testing, inspection and certification market will continue to benefit from exciting growth prospects driven by what they describe as global trade flows, global demand for energy, expanding regulations, more complex supply chains, technological innovation and increased demand for higher quality and more sustainable products.

Those buying near the bottom of the 35% or so retreat in the share price since the heady peaks reached during 2013 look vindicated by these results. Yet it’s not too late to run your analysis on this quality business — perhaps after waiting for today’s results-induced spike to subside.

Pedestrian

It’s a different story from Ultra Electonics Holdings where most financial performance figures are a bit down. The firm’s chief executive reckons the results reflect a generally lower level of activity across most parts of the company’s government related business, with the effect increased by a pause in normal business due to the UK and US election cycles.

The firm expects better results in the second half of its trading year according to the traditional weighting of its income. However, City analysts following Ultra Electronics expect a 2% earnings contraction for 2015 overall.

Defence suppliers are often touted as ‘defensive’ investments, because of the consistent nature of cash flow. In fairness, the directors did hike the payout by 4.5% with these interims. Yet, at today’s share price of 1747p, Ultra Electronics yields just 2.8% for 2016 and the firm’s five-year share price record is pedestrian. There’s nothing here to excite me, so I’m avoiding the company’s shares.

Highly rated

With revenue rising 3% and profits falling 3%, Fidessa Group’s share price drop this morning seems like an adjustment of expectations — the shares had risen a fair bit leading up to today’s interims.

Fidessa’s strong niche serving the financial industry has seen the firm grow steadily and the share price rather more recklessly. Today’s forward price-to-earnings rating around 25 looks rich set against City analysts’ expectations of an 8% uplift in earnings during 2016. So, when investor expectations are high, any wobble on earnings growth can cause volatility in the firm’s share price, as we are seeing today.

The chief executive reckons the firm’s customer markets are starting to enter a new phase of recovery as regulatory and structural changes begin to take effect. More regulatory change results in more opportunities for Fidessa and a strengthening pipeline of business. However, he offers a warning that competition within the industry is increasing, which could lead to further closures and consolidations. There could be stronger headwinds during 2016.

The post Is It Time To Invest In Intertek Group plc, Ultra Electronics Holdings plc And Fidessa Group? appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has recommended Intertek. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

However, this uncertainty and understandable question marks appear to be priced in to Barclays’ share price. Certainly, the apparent end of the Greek debt crisis is good for investor sentiment in the short run, but in the long run Barclays appears to offer substantial rerating potential. For example, it trades on a forward price to earnings (P/E) ratio of just 9.7 and this indicates that its shares are very cheap and also price in the uncertainty that is set to increase in the coming months.

Furthermore, Barclays is a hugely profitable, well-run bank that is not enduring the challenges that many of its competitors face. For example, it is not overly exposed to one particular, struggling region and has an efficient business model that is not experiencing spiralling costs. In addition, its bottom line is set to grow at a double-digit rate per annum over the next few years.

Similarly, challenger bank, Shawbrook (LSE: SHAW), is also priced to sell at the moment. It trades on a forward P/E ratio of just 10.8 which, when you consider that its financial performance has been relatively impressive, appears to be a low price to pay.

Of course, the real potential for investors in Shawbrook is with regard to its income prospects. While it is set to yield just 1.1% next year, Shawbrook is expected to pay out just 12% of profit as a dividend in 2016. That’s exceptionally low and, in fact, if it were to pay out a still very affordable 50% of profit as a dividend, it would equate to a yield of 4.6%. As such, it could become a superb income play – especially if it can continue to post strong profit growth.

Meanwhile, wealth management company, Brewin Dolphin (LSE: BRW), has an excellent track record of growth. It has produced earnings growth in each of the last five years, with it averaging 10% per annum during the period. And, looking ahead, more growth is on the horizon, with Brewin Dolphin set to benefit from an improving UK economy and moderately high FTSE 100 to post growth of 11% this year and 13% next year.

Despite this excellent growth profile, Brewin Dolphin still offers good value for money. Evidence of this can be seen in its price to earnings growth (PEG) ratio of just 1.1, which indicates that it offers growth at a very reasonable price. And, with Brewin Dolphin set to yield as much as 4.4% next year, it could prove to be a top notch income play, too.

The post 3 Finance Stocks Set To Soar: Barclays PLC, Shawbrook Group PLC And Brewin Dolphin Holdings plc appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

For example, insurer Lancashire Holdings (LSE: LRE) has one of the highest yields in the FTSE 350. It currently yields a whopping 9.9%, which should appeal to almost all income investors. And, while dividends are due to be lower next year than they are in the current year, Lancashire Holdings is still expected to yield 9.2% next year, which means that in the course of two years it could provide its investors with an income return of 19%.

Of course, the reason for such a high yield is that Lancashire Holdings is in the midst of paying special dividends. And, while special dividends are very welcome for investors, there is no guarantee that they will continue. In fact, it could be the case that Lancashire Holdings requires capital in future, potentially for a growth opportunity, and asks for a proportion of the special dividends to be returned in the form of a capital raising. So, while a 9.9% yield sounds mightily impressive, it may not last over the medium term.

Clearly, the yield on offer at Aviva (LSE: AV) (NYSE: AV.US) is also hugely appealing. It currently yields 5% using next year’s forecast dividend per share figure and, while Lancashire Holdings is expected to post a fall in net profit of 28% this year followed by 4% next year, Aviva’s bottom line is forecast to rise by 11% in 2016. As such, its price to earnings (P/E) ratio of 10.7 holds more appeal than Lancashire Holdings’ P/E ratio of 10.9, with there being more chance of an upward rerating to Aviva’s valuation moving forward, owing to the positive catalyst of earnings growth.

However, where Aviva carries risk is with regard to its takeover of Friends Life. While in the long run this is likely to create a more efficient and hugely profitable entity, history shows that mega-mergers can come with teething problems, as well as a number of challenges that are not foreseen until the deal is signed and sealed.

As such, Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) could prove to be an even better buy than Aviva. Certainly, it is also experiencing a transitional period as it adjusts to a new, slimmed down management team and, with the Chinese economy seeing a slowdown, its shares may come under a degree of pressure in the short run. However, with its bottom line set to rise by 13% next year and its shares trading on a P/E ratio of 11.2, it appears to offer the most scope for a share price rise. In addition, Standard Chartered’s dividend yield of 4.8% is also hugely appealing, too.

So, while Aviva and Lancashire Holdings are great stocks that are worth buying, Standard Chartered seems to offer the most potent mix of growth, income and value.

The post Aviva plc Vs Standard Chartered PLC Vs Lancashire Holdings Limited: Which Finance Stock Is The Best Buy? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Aviva and Standard Chartered. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

While the shares of these three companies may or may not go lower in the short term, valuations at current levels suggest this could be a good time to buy for long-term investors.

HSBC

There was once a time when investors sung the praises of geographical diversification. Not so with banks, these days, it seems. Like holidaymakers who go to Bognor Regis fearing a dose of runny tummy if they venture abroad, investors seem to be flocking to homely Lloyds and shunning international HSBC.

Lloyds is a comfortable option right now, because the UK economy is doing relatively well, and the bank is approaching a high level of efficiency on such things as the cost:income ratio and return on equity. Meanwhile, the rest of the world isn’t firing on all cylinders, and the ongoing restructuring of HSBC has yet to deliver the kind of efficiency Lloyds is currently demonstrating.

Nevertheless, in the long-term (decades), I believe HSBC’s exposure to higher growth regions of the world, and its current lowly rating as it works to become a more efficient operator, give it the potential for higher returns for investors in the future. Intuitively, unloved HSBC — trading at around tangible book value (compared with fashionable Lloyds at one-and-a-half times book) — looks a stock about which we should, as Warren Buffett says, “be greedy when others are fearful”.

Aviva

Insurer Aviva is another financial company that is still in the midst of restructuring, following the 2008/9 global financial meltdown. Aviva’s £5.6bn acquisition of rival Friends Life earlier this year complicates things, but the rationale for the deal looks good, based on expected cost-saving synergies, cross-selling opportunities and so on.

The merger is expected to produce a modest 5% dip in Aviva’s earnings this year, but analysts are forecasting growth of 12% in 2016, as the benefits of the combined group come through. The forecast for 2016 puts Aviva on a bargain-basement price-to-earnings (P/E) ratio of 10, and there’s a prospective 4.8% dividend yield to boot.

There are, of course, always execution risks when a company makes a major acquisition, but Aviva’s CEO Mark Wilson has a strong record of successfully restructuring and repositioning businesses.

IG Group

Spread-betting firm IG Group tends to do well when markets are volatile and not so well when they’re becalmed. The latter was the case for long periods of IG’s latest financial year to 31 May (for which it will report results next month). Earnings are expected to dip 8%, but analysts are forecasting a big rebound of 20% in the coming year.

The earnings growth rate coupled with a P/E of about 16.7, gives IG an attractive P/E-to-earnings-growth ratio of less than 0.9. A rate below 1.0 implies good value for money. Also appealing is the company’s prospective 4.3% dividend yield.

While IG’s earnings can vary in the short term, depending on the state of the markets, the group’s long-term growth record over its 40-year history is excellent, and there appears no reason to suppose it cannot continue.

The post 3 Financials To Buy Today: HSBC Holdings plc, Aviva plc And IG Group Holdings plc appeared first on The Twelfth Magpie.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.