The past 12 months have delivered a brutal beating to abdrn (LSE: ABDN) shares. Indeed, the shares crashed by more than half in an 11-month period. But they’ve since bounced back hard, so is it time for me to buy shares in the investment firm formerly known as Aberdeen?
A terrible 2022 for the shares
In January 2018, the shares were riding high and briefly exceeded £5. Alas, it’s been pretty much downhill ever since for the Edinburgh-based investment company and asset manager. Here’s how the shares have performed over the short and medium term, based on the current share price of 177.2p:
| One day | 2.1% |
| Five days | 7.8% |
| One month | 30.8% |
| Six months | -1.0% |
| 2022 YTD | -26.4% |
| One year | -32.9% |
| Five years | -62.7% |
As well as crashing almost a third over the past 12 months, they’ve lost almost two-thirds of their value in the last half-decade. Even after adding in cash dividends worth a few percentage points a year, this stock has been a loser for long-suffering shareholders.
At their 52-week high on 11 November 2021 — almost a year ago — abrdn shares briefly hit 265.3p. But then they collapsed spectacularly over the next 11 months. On 10 October, they imploded to a 52-week low of 131.03p. That’s a fall of more than half (-50.6%). Crikey.
The share price makes a comeback
That said, the share price has surged dramatically over the past month. Since last month’s low, it has soared by 46.2p, shooting up by 35.2% in under a month. This must come as genuine relief to its shareholders, both retail and institutional.
Had I noticed the shares slumping so low last month, I’d have definitely bought into this cheap stock at a huge discount to its 52-week high. However, I was on a sabbatical from working, so I failed to spot abrdn’s descent.
Are the shares still cheap today?
Having missed out on an excellent opportunity to buy this stock while it was in the bargain bin, would I buy abrdn shares today?
At the current share price, abdrn is valued at under £3.7bn. If I had this sum to hand, I’d happily buy the entire business at this modest price tag. What’s more, with a lowly price-to-earnings ratio of 6.4, the shares offer a market-thrashing earnings yield of 15.7%.
In addition, they offer a mouth-watering dividend yield of 8.2% a year — twice the cash yield on offer from the wider FTSE 100 index. Even better, this cash yield is covered 1.9 times by abrdn’s trailing earnings, which is a wide margin of error.
Now for the bad news. As a major UK asset manager, abdrn’s revenues, earnings and dividends are heavily geared towards the success (or otherwise) of global capital markets. Hence, the group’s results could be harmed if global stock, bond and property markets do poorly in 2023.
Even so, I suspect some of this bearish news is already baked into the shares today. Hence, I’d happily buy this stock right now — if only I had some spare cash to invest, that is!
