Are Standard Chartered PLC, Prudential plc And Record Plc Set To Rise By 20%+?
The road to recovery for Standard Chartered(LSE: STAN) may not prove to be as long or as challenging as many investors had predicted. Certainly, the Asia-focused bank has endured an extremely difficult period, with regulatory action and uncertainty surrounding the prospects in China hurting investor sentiment in the stock. This has caused Standard Chartered's share price to decline by 47% in the last year.
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However, with a new management team and a slimmer management structure, Standard Chartered looks set to be on the cusp of a strong turnaround. Evidence of this can be seen in its forecasts, with the bank expected to post a rise in net profit of 117% next year following a return to profitability in the current year. This puts Standard Chartered on a forward price-to-earnings (P/E) ratio of just 13.9, which indicates that it offers good value for money and that a 20% rise in its rating is on the cards.
Furthermore, Standard Chartered has excellent long-term growth prospects. China and the wider Asian economy is likely to demand a greater volume of financial products in the coming years and with Standard Chartered being well placed to deliver them, its profitability should continue to rise.
Profits potential
Also offering growth prospects in Asia is Prudential (LSE: PRU). In fact, there are a number of similarities between Prudential and Standard Chartered, with them both being Asia-focused and having relatively new management teams. In addition, Prudential's share price has also disappointed in the last year, being down 12% during the period.
Unlike Standard Chartered, though, Prudential has remained a highly profitable business that has been able to increase its bottom line in each of the last five years. However, in the current year Prudential is due to report a fall in profitability of 7%, which is a potential reason why investor sentiment has weakened. While this is disappointing, Prudential is set to return to growth next year and with its shares trading on a price-to-earnings-growth (PEG) ratio of 1.2, now could be a good time to buy a slice of it ahead of a possible 20%-plus gain.
Wait and see
Meanwhile, currency management company Record(LSE: REC) today reported a rise in its assets under management. They increased from $53.5bn at the end of December to $53.7bn at the end of March, with passive hedging assets growing in the quarter and helping to offset declines in dynamic hedging and currency for return assets.
Looking ahead, the currency markets continue to face an uncertain outlook. The EU referendum on 23 June is causing investors to remain cautious about sterling's prospects, while there remains a wide divergence of views amongst investors as to their preferences in managing currency risk and opportunity. As such, Record seems to be a stock to watch, rather than buy, at the present time - especially since its earnings are forecast to fall in each of the next two financial years.
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Peter Stephens owns shares of Prudential and Standard Chartered. 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.
