My 3 Favourite Financials: Aviva plc, Barclays PLC And Man Group PLC

Aviva plc (LON: AV), Barclays PLC (LON: BARC) and Man Group PLC (LON: MAN) look set for a few good years.

| 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.

The financial sector has been heading back to strength more quickly than many had anticipated, with all of the UK’s listed banks passing the Bank of England stress tests. But which financials are looking good now? Here are three favourites of mine:

Aviva

I liked the way Aviva (LSE: AV) (NYSE: AV.US) bit the bullet and slashed its dividend when it was needed. It annoyed a lot of income investors, but it was undoubtedly good for the long term. Aviva was able to get its capital strength back up to scratch, and although chief executive Mark Wilson did say that “there is still more to do before we can be satisfied we are fully delivering on our investment thesis of cash flow plus growth” at Q3 time this year, the turnaround plan is clearly succeeding.

The dividend yield is expected to rise to 3.6% for the year just ended, and forecasts see it climbing to 5% by 2016 — and better covered than during the crisis.

Yet the shares, despite gaining nearly 80% since their May 2012 low to 504p, are still on P/E multiples for this year and next of only 10 and 9.

Barclays

I reckon Barclays (LSE: BARC) (NYSE: BCS.US) could be our winning bank in 2015. Due to a slide in the first half of 2014, Barclays shares are down 25% over 12 months, to 228p.

But that’s left them on a P/E of only 9 based on 2015 forecasts and dropping to 7.6 for 2016, with dividend yields of 4.1% and 5.1%. The reason for the low valuation is surely the risk of further misbehaviour being uncovered resulting in further fines, as Barclays’ record is not squeaky clean. But there’s a big Strong Buy consensus amongst analysts right now, and I think they’re right.

Man Group

Hedge fund manager Man Group (LSE: EMG) is a dark horse. During the financial crisis the company wasn’t able to make the returns it needed to charge its full fees, and it faced a run on investors’ capital. Profits fell, and the share price crashed from around the 310p mark in early 2011 to just 64p eighteen months later. But since the start of 2014 it’s been storming back, up 80% over the past 12 months to 157p.

By Q3 time, acquisition had helped Man to boost its funds under management by 25% to $72.3bn, but that also included net inflows and profits from performance. Chief executive Manny Roman did say that “our outlook for flows is mixed and will depend on performance“, but analysts are getting bullish and I think this is one that deserves closer scrutiny.

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.

Alan Oscroft 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.

More on Investing Articles

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 »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

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

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »