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Aviva plc isn’t the only value stock I’d buy for retirement

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Finding the right shares for retirement can be challenging. That’s especially the case given that the stock market is currently trading close to an all-time high. Therefore, unearthing stocks that offer good value for money could be even more difficult than usual at the present time.

However, Aviva (LSE: AV) is one stock that seems to offer a good mix of growth potential and a low valuation. But it’s not the only company that could be worth buying for retirement. Reporting on Tuesday was another stock that could be worth a closer look.

Strong maiden results

The company in question is diversified financial services business TP ICAP (LSE TCAP). It released its first set of full-year results following major changes to its structure. Its integration process is progressing well, as synergy savings were accelerated from 2018 into 2017. It therefore achieved £27m of synergy savings in 2017, which is ahead of its £10m target.

The next phase of its integration will focus on delivering its IT plan, with the overall synergy saving target of £100m by 2020 remaining in place. The business has been able to overcome regulatory change, while so far in 2018 it has reported an encouraging start to the year.

Looking ahead, TP ICAP is expected to report a rise in its bottom line of 21% in the current year, followed by further growth of 17% next year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.7, which suggests that it could deliver impressive returns. And while there are ongoing changes at the company following recent acquisitions, the overall trajectory of its share price could be upwards over the medium term.

Changing business

Of course, Aviva also experienced a period of major change in recent years. It made a number of asset disposals and acquisitions, with it becoming a more efficient entity as a result. The company has been able to generate improving profitability in recent years, and this trend is showing little sign of changing in the near future.

For example, over the next two years Aviva is expected to report a rise in its bottom line of 61% in the current year, followed by further growth of 8% next year. Despite such a positive outlook for the company, it has a price-to-earnings (P/E) ratio of just 9. This suggests that it is undervalued at the present time and may offer growth at a reasonable price. That’s especially the case since it has strong capital generation which may be used to invest in future growth opportunities.

With Aviva having a dividend yield of 5.6% from a payout which is covered almost twice by profit, it appears to be a strong income stock. As such, its mix of capital growth potential and a high income return could lead to a strong performance in the long run.

Millionaire prospects

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Peter Stephens owns shares in Aviva. 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.