2 Great Value Growth Plays: Aviva plc & Standard Chartered PLC

Look no further than Aviva plc (LON: AV) and Standard Chartered PLC (LON: STAN) for growth at a reasonable price!

| 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.

Cash

It’s been a mixed year for investors in Aviva (LSE: AV) and Standard Chartered (LSE: STAN). That’s because, while shares in the former have made gains of 16% year-to-date, the latter is down 8% since the turn of the year. Despite this, both appear to offer growth at a very reasonable price. Here’s why.

Valuation

On the face of it, both companies appear to offer great value for money at their current prices. For example, Aviva currently trades on a price to earnings (P/E) ratio of 11.1, while Standard Chartered’s shares are also cheap at their current price level. They trade on a P/E ratio of 11.3 and, with the FTSE 100 currently having a P/E ratio of 13.8, there appears to be substantial scope for an upward rerating of both stocks.

Should you invest £1,000 in Chesnara Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Chesnara Plc made the list?

See the 6 stocks

Growth Potential

However, when the two companies’ growth prospects are taken into account, they appear to offer even better value for money. That’s because the two companies are expected to increase their bottom lines by 10% next year, which is above the market average. It means that, when combined with their P/E ratios, Aviva and Standard Chartered have price to earnings growth (PEG) ratios of just 1.1. This indicates growth is on offer at a very reasonable price and means that there is considerable upside potential.

Short-Term Challenges

Certainly, neither company is without its problems. Aviva, while in a much better position than when it cut its dividend in March 2013, is still in the process of streamlining its business and making its operations more efficient. Although clearly moving in the right direction, this will inevitably include some lumps and bumps along the way. In addition, with dividends still being below their pre-March 2013 level, Aviva yields just 3.2% and this may disappoint some investors. The upside is that with profit set to grow at a rapid rate, dividends per share look set to increase by 15% next year.

Meanwhile, Standard Chartered has endured a tough 2014. Profit was down 20% in the first half of the year and a fine was agreed with US regulators recently, with sentiment being very weak as a result. Unlike Aviva, it offers a 4%+ yield that is set to also grow at a brisk pace, with the bank having the potential to benefit from an improved macroeconomic outlook for the Far East over the longer term.

Looking Ahead

The future for the two stocks, though, looks very bright and they could turn out to be star performers. Indeed, with a potent mix of growth potential and low valuations, Aviva and Standard Chartered appear to be two great value growth plays that could make a positive contribution to retirement portfolios moving forward.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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 Aviva. The Motley Fool UK owns shares of Standard Chartered. 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

One English pound placed on a graph to represent an economic down turn
Investing Articles

2 top dividend stocks to consider for passive income in May

Our writer thinks these two shares are well worth checking out for investors targeting a growing stream of passive income…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

53% under its fair value, should investors consider buying this FTSE 100 banking gem right now?

This FTSE 100 bank looks extremely undervalued to me following a shift in its key banking strategy towards fee-based rather…

Read more »

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

Under £25 now, Shell’s share price looks cheap to me anywhere below £66.43!

Shell’s share price has fallen a lot recently, but this may indicate a bargain to be had. I took a…

Read more »

UK supporters with flag
Investing Articles

5 FTSE 100 shares driving wealth in my Stocks and Shares ISA

Many FTSE 100 shares are doing very well this year in the face of upheaval. Ben McPoland highlights a cheap…

Read more »

Tesco employee helping female customer
Investing Articles

In the next 12 months, experts predict the Tesco share price will be…

Tesco’s dominant position in the UK grocery space is getting stronger, but what does that mean for its share price?…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

Prediction: 12 months from now, the HSBC share price could turn £5,000 into…

With China's first-quarter GDP growth beating expectations, the HSBC share price might be primed to thrive! Here are the latest…

Read more »

Array of piggy banks in saturated colours on high colour contrast background
Investing Articles

Prediction: in the next 12 months, the Lloyds share price could climb to…

With a Supreme Court ruling expected soon, Zaven Boyrazian dives into the latest expert forecasts for the Lloyds share price…

Read more »

Branch of NatWest bank
Investing Articles

1 share to consider for those new to the stock market (and other investors too)

Our writer looks at how those wanting to start investing in the stock market could go about things. But he…

Read more »