The Motley Fool

Why I’m holding onto TP ICAP plc after today’s update

Shares of interdealer broker group TP ICAP (LSE: TCAP) rose by as much as 10% when markets opened this morning.

The gains were triggered when the firm — previously known as Tullett Prebon — said that last year’s volatile market conditions mean that 2016 revenue should be 12% higher than the £796m reported in 2015.

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...

My calculations suggest TP ICAP’s 2016 revenue will now be around £891m, which is significantly higher than analysts’ forecasts of £846m.

Big changes underway

Today’s figures from TP ICAP only refer to the old Tullett Prebon business. But the group has recently acquired the broking business of UK rival ICAP (now known as NEX Group). The integration of these two businesses is now moving “swiftly” ahead, and TP ICAP will provide expected performance figures for the combined businesses in March.

In my view, TP ICAP is a good example of a business that’s adapting to changing circumstances, and defying gloomy predictions about its future. The group has addressed the inevitable decline in its voice broking business by expanding into energy trading and acquiring the ICAP broking business.

So far, TP’s major acquisitions have been well timed. Rising interest rate expectations should boost trading in some of the group’s core products, such as interest rate derivatives.

TP ICAP has beaten expectations over the last year, but the shares still look cheap to me. The firm trades on a 2017 forecast P/E of 12.4, with a prospective yield of 4%. I believe further gains are possible, and continue to hold this stock in my own portfolio.

Don’t bet against this bank

Asia-focused bank Standard Chartered (LSE: STAN) has been slow to recover from a prolonged downturn. But there are signs that the group’s performance is starting to improve.

In November, Standard Chartered reported a 5% fall in loan impairments during the third quarter. Underlying pre-tax profit was $458m, compared to a loss of $139m for the same period one year earlier.

Standard Chartered’s Common Equity Tier 1 (CET1) ratio of 13% is at the upper end of its target range. The group’s return on equity — a key measure of profitability — turned positive during the first half of last year, and a full-year profit of $597m is expected for 2016.

Looking ahead at 2017, rising interest rate expectations should help to improve returns. The bank’s profits are expected to rise by 175% to $1,647m this year. Consensus forecasts suggest that adjusted earnings will rise by 135% to $0.50 per share.

The current share price of 688p puts Standard Chartered on a forecast P/E of 17, with a prospective yield of 2.5%. This may seem expensive, but profits remain a long way below historic levels and I believe further increases are likely.

The shares also trade at a discount of more than 30% to their tangible book value. If the bank can continue to reduce its bad debt levels, this discount should gradually shrink.

In my view, a medium-term price target of 900p isn’t unreasonable. I plan to continue holding.

“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!

Roland Head owns shares of Standard Chartered and TP ICAP. 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.

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.