My Favourite FTSE 350 Stocks Right Now: Aviva plc, Hiscox Ltd And Novae Group Plc

These 3 stocks look set to soar: Aviva plc (LON: AV), Hiscox Ltd (LON: HSX) and Novae Group Plc (LON: NVA)

| 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.

With the FTSE 100 having reached an all-time high in 2015, there may be some concerns regarding valuations of leading companies at the present time. Certainly, the FTSE 100 may have fallen back somewhat following concerns surrounding the Greek debt crisis, but many investors may feel that with interest rate rises on the horizon, a level of around 6,800 points is relatively generous for the UK’s leading index.

However, insurance stocks such as Aviva (LSE: AV) (NYSE: AV.US) continue to offer excellent value for money. That’s despite Aviva’s share price having risen by an impressive 58% in the last five years, with its turnaround strategy being successful in taking a red bottom line, returning it to positive territory and delivering excellent profit growth last year.

In fact, Aviva currently trades on a price to earnings (P/E) ratio of just 11.4, which is difficult to justify when you consider the numerous positive catalysts that are on the horizon. One notable potential catalyst that could push the company’s share price higher is the expectation that Aviva will post earnings growth of 12% next year. That is around twice the growth rate of the wider index and puts Aviva on a price to earnings growth (PEG) ratio of 0.8, which indicates that its shares are very undervalued.

Furthermore, Aviva is set to improve its efficiency in the coming years as it integrates the Friends Life business that was acquired into its own. This may cause teething problems in the short run, since merging two large businesses is never a straightforward task, but in the long run it should mean a lower overall cost base, improved margins and a more dominant position relative to Aviva’s competitors.

Meanwhile, non-life insurer Hiscox (LSE: HSX) also appears to offer excellent value for money at the present time. For example, it has a price to book (P/B) ratio of 1.75 and has a trailing P/E ratio of just 13.5. Furthermore, Hiscox has significant income potential, too, with its dividend currently being covered by profit an impressive 2.4 times. This should provide it with considerable scope to increase dividends at a rapid rate even if profit growth disappoints.

In fact, if Hiscox were to pay out around two-thirds of profit as a dividend then it would equate to a yield of 4.3% and, while Hiscox’s current yield of 2.7% is rather modest, it clearly has the potential to move much higher.

It is a similar story with smaller peer, Novae (LSE: NVA). Its dividends are covered twice by profit and, with it having a yield of 4.1% at the present time, there is scope for a very generous income return over the medium to long term. Furthermore, like Aviva, Novae also offers stunning capital gain potential, too. For example, it is forecast to grow its earnings by 10% next year and, despite this, its shares currently trade on a PEG ratio of just 1.1, which indicates that strong growth is on offer at a very reasonable price.

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.

Peter Stephens owns shares of Aviva. 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

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 »