The Motley Fool

Why I’m Keen To Buy More Royal Bank Of Scotland Group plc

RBS (LSE: RBS) (NYSE: RBS.US) is a stock that I think has a great few years ahead of it.

One reason for this is that I believe its current valuation is far too low.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Indeed, using the price-to-book ratio (which is a relevant measure in the banking sector) RBS screams value, with its ratio of net assets to market capitalisation being just 0.33.

This means that investors can buy £1 of net assets in RBS for just one-third of the value as listed on the balance sheet. For me, this is simply too good to be true.

Of course, the net assets of RBS may shrink as a result of further losses or the write down of more assets — particularly its US property portfolio which has been hit in recent years. However, even taking into account such potential falls, shares still look to be far too cheap and, as such, I don’t believe they will stay this low for too long.

However, a cheap share price is not the only reason why I’m bullish on RBS and am thinking of adding to my shareholding.

As an income-seeking investor, I’m optimistic (as is the market) that RBS will pay a dividend of around 2p per share in 2014. This equates to a yield of just 0.5% but, with no dividend being paid since before the start of the credit crunch, it’s a start.

Certainly, RBS is unlikely to become a super yield stock overnight but within a few years it may just be a welcome addition to an income portfolio. For this reason, I’m keen to add more shares to my portfolio.

In addition, RBS is focused on the UK and, in my view, the UK’s prospects are improving so it’s a good place to be. Of course, an economic boom is unlikely to occur in 2014 but the chances are that things will improve to some extent. This means that RBS could suffer less from write downs than it has in the past and may benefit from the Help to Buy scheme boom which many investors are predicting, since only it and Lloyds have signed up to the government’s scheme.

So, I’m bullish on RBS because of what I believe is a very low valuation, the potential for a growing yield as well as RBS being focused on the UK, an economy that I believe will experience an improvement in fortunes over the medium to long term.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

> Peter owns shares in RBS.

Our 6 'Best Buys Now' Shares

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.