The RBS share price has performed strongly this year and market sentiment is improving. In this piece I’ll explain why I’m holding onto my shares. Plus I’ll look at a fast-growing small-cap financial firm that’s just released some attractive numbers.

One big number

One remaining hurdle for RBS is that the UK government still owns 62% of the bank’s stock. This £20bn shareholding means that the government may have some influence over the bank’s activities and strategy.

Another concern is that we know the government wants to sell by 2024. This means there is a big ‘overhang’ of stock that will need to be sold into the market. If demand isn’t strong enough, this could depress the bank’s share price.

RBS is trying to address these concerns by offering to buy back some of the government’s shares. It’s gained shareholder approval to buy back up to 4.99% of its shares each year — about £1.6bn at current prices.

The timing of government share sales is uncertain, but I believe a buyback of this kind would be good news for shareholders.

Outlook is improving

RBS shares have risen by 26% so far in 2019, reversing the falls seen during the final quarter of last year. After a strong set of annual results in February, investors seem to be gaining confidence. Earnings forecasts for the current year have been rising and the stock’s discount to its book value is disappearing fast.

Last year’s results confirmed that the bank’s profitability is improving. RBS stock now trades on 9.5 times 2019 forecast earnings and offers a 4.6% yield. For long-term income investors, I believe this could be a good buying opportunity.

Dividends + growth from this small cap

Another financial stock I’m keen on is small-cap fund manager Miton Group (LSE: MGR). Shares in the firm are up by 13% at 59p at the time of writing after the group’s 2018 results came in significantly ahead of expectations.

Earnings for last year came in at 4.7p per share, nearly 15% ahead of analyst’s forecasts. The group’s 2018 dividend of 2p per share also beat forecasts for a payout of just 1.76p per share.

Cash inflows boost results

This specialist firm has a good track record of performance. At the end of 2018, 81% of its funds were in the top 50% of the market, in terms of their performance against rivals.

Customers appear to be keen to add more of their cash to the group’s funds. Net inflows rose to £1,019m in 2018, more than double the figure for 2017. This left the group’s total assets under management (AuM) up by £553m to £4,376m.

Although some of the firm’s funds were hit by the market sell-off at the end of last year, this was true across the market. In my view, it doesn’t detract from Miton’s strong track record.

I expect analysts’ forecasts for 2019 to be upgraded following today’s results. Although the group’s performance is dependent on wider market conditions, I see this as one of the best options in the fund management sector.

Miton shares now yield 3.4%, providing a useful income for patient shareholders. I remain a buyer.

The post This is what I’d do about the RBS share price right now appeared first on The Twelfth Magpie.

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Roland Head owns shares of Miton Group and Royal Bank of Scotland Group. 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.

However, with HSBC being in a transitional phase, which is seeing costs cut across the business as it seeks to become a more efficient entity, its medium-to-long-term outlook remains positive. This view is evidenced by the 9% forecast rise in earnings for next year, with HSBC’s longer-term future likely to be very bright due to its position within what could become a highly lucrative Asian market for financial services companies.

Furthermore, HSBC trades on a price-to-earnings (P/E) ratio of just 9.4 and yields a whopping 8.5%. Both of these figures indicate that the company’s shares are dirt cheap and while there may be further challenges ahead, HSBC seems to offer growth, value and income potential. Therefore, buying now could prove to be a very wise move.

Long-term buy

Also falling of late have been shares in Provident Financial (LSE: PFG), with the lending company posting a fall in its share price of 12% since the turn of the year. Clearly, there are concerns surrounding the potential for a higher interest rate over the coming years and the impact this will have on default rates and also on demand for new loans. However, with Provident Financial expected to record a rise in its earnings of 16% this year and a further 12% next year, its financial performance looks set to remain very upbeat.

Furthermore, following its recent share price fall Provident Financial now trades on a price-to-earnings-growth (PEG) ratio of just 1.3. This shows that it offers good value for money as well as upbeat growth prospects, with its shares currently offering a relatively wide margin of safety. This means that even if forecasts are downgraded somewhat due to external challenges, Provident Financial could still prove to be a profitable buy for the long term.

Meanwhile, shares in asset management company Miton (LSE: MGR) have fallen by around 30% today after it announced the departure of two fund managers. This has clearly unsettled the market, since the two individuals managed what has become an important fund for the company, with it accounting for 29% of the company’s total assets under management.

Clearly, this is an uncertain time for Miton and while its shares had performed well in the earlier part of the year, they’ve reversed all of their gains to be down 3% for 2016 at the time of writing. While the company’s recent results showed that it’s making progress, it may be prudent to await further news before considering the purchase of shares in Miton.

The post Are HSBC Holdings plc, Provident Financial plc And Miton Group PLC Stunning Buys After Recent Falls? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of HSBC Holdings. 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.

In fact, Miton recorded net inflows of £436m for the year, with positive investment performance also contributing £278m to its increase in assets under management. And while the company states that it’s not immune from market headwinds, it believes it’s in a relatively strong position to take advantage of the opportunities that are likely to arise in a volatile market.

With Miton forecast to increase its earnings by 57% in 2016, its current price-to-earnings (P/E) ratio of 24.4 appears to indicate that there’s capital gain potential ahead. While a relatively small company and a risky buy, Miton could nevertheless prove to be a sound investment for the long haul.

On the up

Also making share price gains today is CPP Group (LSE: CPP), with the credit card insurer being up 10% despite releasing no significant news flow. Clearly, its shares are relatively volatile but as a business, CPP appears to be moving in the right direction after a challenging period.

In fact, its most recent half-year results highlighted that CPP is gradually turning its performance around. For example, it secured new equity funding and restructured the group’s debt in the first half of the year and this provides CPP with a more stable base through which to potentially improve profitability in the full year. This is being aided further by ongoing cost control which, at the halfway point of the year, contributed to an underlying operating profit of £2.2m versus breakeven in the previous year’s comparable period.

With CPP’s shares having risen by 93% in the last six months, investors appear to be bullish regarding its future. While it’s relatively high-risk, for long-term investors it could prove to be worth a closer look.

Having your cake?

Meanwhile, shares in Patisserie Holdings (LSE: CAKE) have slumped by over 4% today despite there being no news flow released by the company. A possible reason for the fall is a cautious outlook statement made by sector peer Restaurant Group. Its optimism for 2016 has regressed due to uncertainty regarding the EU referendum, the global economic outlook and recent data from consumer-focused businesses.

Clearly, the restaurant industry is benefitting from a rise in disposable incomes in real terms and looking ahead, Patisserie Holdings is forecast to post an increase in its bottom line of 24% in the current financial year. With its shares trading on a price-to-earnings growth (PEG) ratio of just 1.4, they appear to offer good value for money. As such, and while volatility may be high in the coming months, Patisserie Holdings could continue the rise that has seen its share price soar by 42% in the last year.

The post Should You Buy Major Movers Patisserie Holdings PLC, Miton Group PLC And CPP Group Plc? appeared first on The Twelfth Magpie.

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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.