Today I am looking at three FTSE 100 (INDEXFTSE: UKX) fallers that I expect to bounce higher.
A financial great
Growing fears over emerging market cooling has caused Prudential’s (LSE: PRU) stock value to sink during the past six months.
The London-based business has made no secret that it sees Asia as a critical component to its long-term growth story. And this comes as little surprise, as surging personal wealth levels and increasing populations drives demand for insurance products.
Indeed, ‘The Pru’ saw operating profits from its life and asset management businesses in Asia leap 17% in 2015, to £1.69bn, and the company is rapidly expanding in the territory to supercharge its growth prospects.
But Asia is not the be-all-and-end-all for the insurer, with Prudential also enjoying breakneck sales expansion in the US and here in the UK. Sure, the City may expect near-term bumpiness in key regions to push earnings 7% lower in 2016. But the bottom line is expected to rebound with a 9% advance next year.
I reckon consequent P/E ratings of 11.2 times and 10.2 times for 2016 and 2017 correspondingly are too good to ignore given Prudential’s exceptional growth outlook.
Time to chip in?
Ongoing concerns over sales saturation in ARM Holdings’ (LSE: ARM) revenues-critical smartphone and tablet PC markets has seen the business nurse suffer significant share price volatility since mid-November.
The Cambridge firm is now dealing almost a tenth lower from levels seen since the middle of autumn. And even though ARM is not exactly cheap, I reckon now could be a sage time to load up on the chipbuilder as its diversification into the fast-growing robotics, networks, servers and ‘Internet Of Things’ sectors picks up momentum.
The tech play is anticipated to see earnings rise 43% and 15% in 2016 and 2017 respectively, resulting in conventionally-high P/E ratings of 26.7 times and 23.4 times for these years.
But I believe ARM’s terrific track record of innovation — a quality that has made it a critical supplier to device manufacturers across the world — fully merits such a premium, and reckon the firm should continue to deliver explosive earnings growth in the years ahead.
Bank on it
Investor apathy towards the banking sector has seen industry colossus Barclays (LSE: BARC) concede almost a third of its value during the past six months alone.
Barclays has done little to win favour with a market concerned about escalating PPI bills. In March, the business announced plans to more than halve the dividend to 3p per share through to 2017 to shore-up its balance sheet. The company’s CET1 rating dipped to 13.3% as of March, down 10 basis points from the end of 2015.
Meanwhile, Barclays’ meaty exposure to commodity markets and emerging regions — allied with near-term worries over economic slowdown in the UK — has also hampered share price performance.
However, I believe now could be the time to load up on the bank, as arguably the risks facing it are now baked into the price. An anticipated 4% earnings slide for 2016 leaves Barclays dealing on a P/E ratio of just 11.2 times. And the multiple slips to a mere 7.3 times for 2017, thanks to an anticipated 41% bottom-line spike.
The company’s hefty exposure to the robust British and North American marketplaces should deliver strong growth in the years ahead, in my opinion, while its revamped Investment Bank division could also deliver handsome rewards. I believe now is a great time to buy into Barclays’ long-term growth story.
