10.9 Reasons That May Make Standard Chartered plc A Buy

Royston Wild reveals why shares in Standard Chartered plc (LON: STAN) look set to head skywards.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I am outlining why I believe Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) is an excellent growth stock offering tremendous bang for your buck.

Emerging market exposure at great prices

Standard Chartered’s share price has experienced heavy turbulence during the course of the year, shedding around 5% in the year-to-date and dropping heavily from two-and-a-half-year peaks of 1,838p struck in March. Rather than being deterred by the market’s lack of enthusiasm for the stock, however, I believe that the firm boasts sterling growth potential at a decent price, trading on a subdued earnings multiple of just 10.9.

Standard Chartered revealed in a strong interim statement last month that, during the nine-month period ending September, it had “delivered a resilient performance despite an uncertain macro environment, with continued strong levels of client activity and good volumes across many of [its] markets.”

Like banking peers HSBC Holdings and Barclays, Standard Chartered has extensive exposure to lucrative emerging markets, and more than nine-tenths of the firm’s profits originate from Asia, the Middle East and Africa. In total, the company operates across 25 geographies across the globe.

The bank’s October financials revealed some weakness in these lucrative developing geographies during January-September, however, with revenues in Korea and Singapore declining “by single digit percentages.” As well, the group is also susceptible to the threat of weakness in emerging market currencies, and depreciation in a number of these, particularly the Indian Rupee and Indonesian Rupiah, is expected to impact full-year profits to the tune of $70m in 2013.

Still, Standard Chartered noted that particular strength from its Hong Kong and African divisions, where income grew at a double-digit rate, more than offset these disappointments. Strength here helped to push overall group-wide revenues up by 1% from the corresponding 2012 period.

Indeed, I believe that still-heady growth rates in these markets makes for an appetising long-term outlook for the bank — for example, pre-tax profit from Hong Kong exceeded $1bn for the first time in any six-month period in January-June.

Standard Chartered currently deals on a P/E rating of 10.9 for 2013, based on current City earnings projections, and which drops within value terrain below 10 for next year, at 9.9. This compares extremely favourably well with a forward P/E readout of 16.9 for the FTSE 100, and also beats the corresponding readouts of 11.2 and 10.4 for banking peers HSBC and Barclays.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Royston does not own shares in any of the companies mentioned in this article. The Motley Fool owns shares in Standard Chartered.

More on Investing Articles

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »