Prudential (LSE: PRU) has been one of the FTSE 100’s outstanding performers in 2019. Up 25% since the fireworks ushered in New Year’s Day, it seems as if market makers are quite unperturbed about signs of economic cooling in the company’s core Asian territories.
Investors are quite right to be so bullish as the insurer has all the tools to keep on thriving. Last year wasn’t exactly a cakewalk for consumers in Asia, yet Prudential still saw new business profit booming 14% in 2018 to £2.6bn, a result that paid testament to the efforts it has undertaken to bolster its multichannel proposition and effectively develop its product ranges to match the needs of its foreign customers.
It’s impossible to overestimate just how big Prudential’s future market opportunities are, given the rate at which populations are increasing and wealth levels booming in Asian nations. Recent research from McKinsey Global Institute suggests that the continent will account for 50% of global GDP by 2040 and Prudential is setting itself up to exploit these demographic and economic changes.
In the meantime, I’m tipping this dividend growth star to deliver another splendid update when half-year financials are released on August 14. And I reckon its dirt-cheap share price, as illustrated by a rock-bottom forward P/E multiple of 11.2 times, leaves scope for a fresh buying frenzy in the aftermath.
The oilies might shine
Brent prices have fallen under $70 and continued falling until they reached critical technical levels around $60. The fact that they didn’t fall below this level bodes well for prices looking ahead, what with the Iran crisis escalating. Indeed, the worsening diplomatic crisis between Iran and the West suggests that black gold values could resume their upward path sooner rather than later as both sides step up their icy rhetoric and the US and UK bolster their military presence in the Gulf.
Investors in the blue-chip oilies could also point to recent supply-side data as reasons to be optimistic in August. Fears over abundant shale production from the US have died back a bit in recent weeks as the rig count has fallen, the number of units in operation now sitting at their lowest since February 2018. This trend is not the only reason for them to cheer though, as inventory data from the States has also been more promising of late.
But are they buys?
So would I buy into the likes of BP and Shell? Not on your nelly. Even if their share prices do gain additional ground in August, the threat of surging supply in the medium-to-long-term still makes them a risk too far in my eyes.
And one further thing: any support afforded to oil prices by the escalating Iranian crisis next month could easily be unwound should extra sets of weaker economic data come in from the US, Europe and China and raise concerns about the global economy. I’m more than happy to ignore their forward dividend yields of around 6% and invest elsewhere.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.