Despite releasing a first-half update that showed profits were down by around 20% on the first-half of 2013, Standard Chartered (LSE: STAN) could prove to be a great investment opportunity at current levels. Indeed, the Asia-focused bank is trading at the bottom end of its 52-week trading range and has underperformed the FTSE 100 by around 11% year-to-date. This means that it now offers top-notch value for money and could, in the long run, help to pay off your mortgage.
Strong Growth Prospects
Clearly, the banking sector has had a rough ride in recent years. However, due to its focus on the Far East, Standard Chartered has not been hit as hard. For instance, it has not only remained profitable during the last five years, but has increased earnings per share (EPS) in three of those years. Furthermore, after what is expected to be a challenging 2014, Standard Chartered is forecast to increase EPS by around 9% in 2015. This is ahead of the FTSE 100 (where mid-single digit growth is expected) and shows that Standard Chartered remains a strong growth play.
Chinese Potential
Although the Chinese growth story has stuttered in 2014, recent data suggests that it is back on track. Indeed, Chinese PMI (purchasing managers’ index) data signalled the first expansion in six months in June, and first quarter GDP growth was a still impressive 7.4% (annualised). Furthermore, the long-term potential remains vast in China, where the country is evolving from a capital expenditure-led economy to a consumer-led economy. This means more credit will be demanded from businesses and individuals, which could equate to higher revenue and profit for banks with a strong presence in emerging markets, such as Standard Chartered.
Good Value, Good Yield
As mentioned, shares in Standard Chartered currently offer good value for money. They trade on a price to earnings (P/E) ratio of just under 11 (well below the FTSE 100 P/E of 13.9) and have a price to book ratio of just 1.1. In addition, a yield of 4.3% is also appealing and shows that Standard Chartered could be attractive to income-seeking investors as well as growth-seeking investors. As such, it seems to have significant long-term potential and could help to pay off your mortgage.
