The Motley Fool

This FTSE 100 stock looks ripe for a recovery. I’d buy now!

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.

Compass pointing towards 'best price'
Image source: Getty Images.

A couple of months ago, I recommended that investors buy Aviva (LSE: AV). Since then, the FTSE 100 stock has managed to rise by 15%. But I don’t think that investors should stop buying now. In fact, I believe that now is the perfect time to be buying Aviva shares.

New management

At the start of the month, Aviva chief executive Maurice Tulloch stepped down for “family health reasons”. Amanda Blanc was the immediate replacement. While it is saddening to hear the personal reasons behind Tulloch’s departure, I believe that this new appointment will be excellent news for the FTSE 100 stock.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Firstly, Blanc has plenty of experience. This includes being the chief executive of Axa UK & Ireland, where she was praised for helping to reinvigorate a declining business. More recently, she was also chief executive of Zurich Insurance in Europe, the Middle East, and Africa. Clearly, this is a very strong resumé, and one which puts her in good stead for the current role.

Blanc has also been on the Aviva board since the start of the year. This means that she should have a strong understanding of the business and the weaknesses that will need to be addressed. Blanc herself has promised to “look at all our strategic opportunities, and at pace”.

Does this mean a new direction for the FTSE 100 stock?

It’s been a fairly disappointing few years for Aviva shareholders, especially as it has not been able to deliver consistent growth. In many ways, I think this is due to a lack of clear strategy. Many of the other UK insurers like Legal & General or RSA focus solely on either life insurance or non-life insurance.

Nevertheless, Aviva has retained presence in both markets, arguing that there were cross-selling opportunities. While it sounds good on the face of it, it has not worked as well as many would have hoped. Tulloch himself admitted that the “far too complex” structure was “holding [the FTSE 100 stock] back”.

As a result, if the new leadership is willing to make changes, I believe that Aviva could become a more profitable business over the next few years. Along with Amanda Blanc, George Culmer (the former chief financial officer at Lloyds) also joins the company. Two new members in the boardroom should therefore help to quicken any changes and offer new ways of moving forwards.

Other reasons to buy the stock

While I believe a new direction is necessary, it’s important to note that Aviva is already a good business. Last year, the FTSE 100 stock managed to make profits of £2.5bn, and comfortably paid out £1.2bn in dividends. The insurer has also managed to reduce debts over the last few years. This means that the debt-to-equity ratio is now under 50%, compared to 82% five years ago.

As a result, the company looks in fine shape to both absorb any losses due to the pandemic and move forward with the company. I recently added more Aviva shares to my portfolio, and I think that now offers a very good time to do so.

Is this little-known company the next ‘Monster’ IPO?

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.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Stuart Blair owns shares in Aviva and Legal & General. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.