4 Financial Stocks Set To Soar: Virgin Money Holdings (UK) PLC, Admiral Group plc, Old Mutual plc And Amlin plc

Buying these 4 financial companies could be a shrewd move: Virgin Money Holdings (UK) PLC (LON: VM), Admiral Group plc (LON: ADM), Old Mutual plc (LON: OML) and Amlin plc (LON: AML)

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While the FTSE 100 is trading at or near to its record high, there are still a number of great value stocks in the banking and insurance sectors. Certainly, they may lack the excitement of the technology sector, or the volatility of the energy sector, but with the UK and global economy making encouraging progress, financials could be a shrewd place to invest in at the present time.

Banking

For example, the UK banking sector is experiencing rapid change, with incumbents coming under attack from so-called ‘challenger’ banks. One such bank is Virgin Money (LSE: VM), which released an encouraging update today. In fact, it has increased its share of the UK mortgage market to 3.6%, with its gross mortgage lending rising by 34% in the first quarter of the year. This shows that, while it may lack the size and scale of some of its rivals, it is possible for a well-run bank that has a slick marketing appeal and a fresh appearance to post strong results in the UK banking sector.

And, looking ahead, Virgin Money is expected to increase its net profit by 5% in the current year, and by a further 49% next year. This is clearly in excess of the wider market’s forecast growth rate and, despite this, the bank trades on a price to earnings growth (PEG) ratio of just 0.2, which indicates that its share price could continue to rise after soaring by 38% since the turn of the year.

Insurance

Of course, there is considerable opportunity in the insurance sector, too. For example, Admiral (LSE: ADM) remains a hugely appealing defensive stock, with it having a beta of just 0.77 and a yield of 5.5%. And, with Admiral having increased its bottom line in four of the last five years (averaging growth of 12% per annum during the period), it appears to offer relative stability to go alongside a stunning yield.

Furthermore, Old Mutual (LSE: OML) offers a potent mix of growth and value and, as such, could be a strong performer in 2015 and beyond. For example, it is expected to increase its earnings by 11% in each of the next two years and yet trades on a price to earnings (P/E) ratio of just 11.7. Both of these figures compare very favourably to the FTSE 100, which offers growth in the mid to high single digits, coupled with a P/E ratio of 16.

And, while Amlin (LSE: AML) is suffering from a weakening in investor sentiment (its shares have fallen by 9% in the last month), now could be a great time to buy due to its low valuation. In fact, Amlin now trades on a price to book (P/B) ratio of just 1.3 and, with a dividend yield of 6.2%, seems to offer a superb mix of income and value potential.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Amlin and Old Mutual. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »