The Motley Fool

Could this FTSE 100 industry giant be one of the best shares to buy now?

Image source: Getty Images.

Prudential (LSE: PRU) is a giant among FTSE 100 insurers. Its market capitalisation is not far short of £30bn. This dwarfs the £11.3bn market value of its nearest rival, Aviva. With its current price 25% below its pre-pandemic 2020 high, could industry titan Prudential be one of the best shares to buy now?

An evolving company

Prudential has been undergoing considerable change in the last couple of years. On 14 March 2018, it announced its intention to demerge its UK and Europe business, resulting in two separately listed FTSE 100 companies. It took until 21 October 2019 to complete the demerger of what is now M&G.

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...

This year Prudential has announced its intention to divest its US business (Jackson). Again, this will result in two separately listed companies. Jackson is expected to be solely listed in the US. The move would leave Prudential focused exclusively on its high-growth Asia and Africa businesses.

One of the best shares to buy in 2019?

I tipped Prudential a couple of times in 2019, between the time it announced its intention to demerge and the completion of the demerger. On 23 March, the share price was 1,560p and on 29 September, it was 1,460p.

These prices compared with a group sum-of-the-parts (SOTP) valuation of near to 2,000p. For every Prudential share owned, investors received one in M&G. As such, when the demerger completed, I expected the total of the Prudential and M&G share prices to move closer to the 2,000p SOTP valuation.

The table below shows what happened on the date of the demerger, and a couple of key dates subsequently.


share price (p)

share price (p)

Total (p)

23/3/19 (tip #1)




14/8/19 (tip #2)




21/10/19 (demerger)




12/2/20 (PRU year high)




29/9/20 (current price)




As you can see, when M&G was demerged on 21 October 2019, there was a positive return at 1,584p on my tip #1 (1,560p) and tip #2 (1,460p).

By 12 February this year, the return was up to 1,752p, moving nicely towards that 2,000p SOTP valuation. Then, of course, came the pandemic and stock market crash.

One of the best shares to buy now?

I’ve tipped Prudential several times during the market crash, most notably at 734p on 17 March. However, the shares have since staged quite a recovery. At the current price of 1,132p, do I think this remains one of the best stocks to buy now?

Despite the bounce from the lows, the shares are still trading at a hefty discount – currently 25% – to their pre-pandemic high of 1,506p. At today’s 1,132p, the market is valuing Prudential at just 8.8 times forecast 2020 earnings. If the share price returned to 1,506p, the multiple would rise to 11.7 times, which I consider still undemanding.

This is particularly so, because analysts have pencilled-in 10% earnings growth next year. Furthermore, with the potential value-unlocking separation of the Jackson business, and Prudential then focused on high-growth markets in Asia and Africa, I think 10% annual earnings growth could be sustainable.

There are a good number of quality blue chips trading at discount prices. But I reckon Prudential’s long-term growth prospects make it one of the best shares to buy now.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- 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.