2 Stocks Set To Surge By 50% In 2015? Standard Chartered PLC And Banco Santander SA

How Standard Chartered PLC (LON: STAN) and Banco Santander SA (LON: BNC) could make gains of over 46% next year.

| 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.

Standard CharteredWith the European stress tests showing that the vast majority of the region’s banks are able to cope with a challenging scenario, the sector is likely to benefit from a short-term boost. This is good news for investors in the sector and, more importantly, shows that while the European economy may still be struggling to post impressive growth numbers, it is on the road to recovery.

Despite this, it is still possible to pick up shares in a number of high-quality European banks at very attractive prices. Indeed, two fine examples are Standard Chartered (LSE: STAN) and Santander (LSE: BNC) (NYSE: SAN.US), with both banks having the potential to make gains of more than 46% in 2015. Here’s how.

Growth Potential

While the European economy is set to deliver little in the way of growth in 2015, it is expected to be a very different story for Santander and Standard Chartered. As a result of their exposure to the faster growing economies of the UK and Asia, the two banks are forecast to increase their bottom lines by 21% and 11% respectively next year. These are both hugely attractive growth numbers and show that, as well as being capable of withstanding a stress test, they remain highly attractive growth plays, too.

Share Price Upside

With Santander currently trading on a trailing price to earnings (P/E) ratio of 17.4, it seems as though investors are very willing to pay a premium to the FTSE 100’s P/E ratio of 13.4. With its bottom line due to grow by 24% this year (followed by the previously mentioned 21% gain in 2015), this could mean that shares in Santander trade at a level that is 50% higher than the current share price in 2015.

This may seem to be a very optimistic price target, but could be achieved via shares in Santander maintaining their current rating and the bank being able to deliver on its near-term profit forecasts.

More Potential Gains

Similarly, shares in Standard Chartered could also deliver strong gains in 2015. Unlike Santander, Standard Chartered trades at a discount to the wider index, with it having a P/E ratio of 10.1. Were Standard Chartered to trade on the same rating as the wider index, it could mean that shares are 46% higher than their current price level.

As with Santander, this may appear to be very optimistic. However, with the Asian economy enduring a disappointing period but still having a very bright long-term future, Standard Chartered could easily see its P/E ratio move upwards over the next year. When combined with the aforementioned 11% earnings growth forecast for 2015, this change in rating could push shares 46% higher than their current level.

As a result, shares in Santander and Standard Chartered seem to offer huge potential at current price levels. As such, they could be well worth adding to your portfolio.

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 has no position in any shares mentioned. 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.

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Should I buy skyrocketing Palantir stock for my ISA in 2025?

This red-hot artificial intelligence share has even outperformed Nvidia so far this year. Is it finally time I added it…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

2 of my favourite UK growth shares this December!

These FTSE 250 growth shares offer excellent value right now. Here's why I'll buy them for my portfolio if the…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

10% dividend growth! 2 FTSE 100 stocks tipped to supercharge cash payouts

These FTSE 100 stocks have strong records of dividend growth. And they're expected to keep on delivering, as Royston Wild…

Read more »

Investing Articles

Down 17% in a month and yielding 7.39%! Is this FTSE 100 share a screaming buy for me?

When Harvey Jones bought Taylor Wimpey last year he thought this FTSE 100 share was a brilliant long-term buy-and-hold. Has…

Read more »

Investing Articles

Here’s how I’m using a £20k ISA to target £11k+ in income 30 years from now

Is it realistic to put £20k in an ISA now and earn over half that amount every year in passive…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

If I could only keep 5 UK stocks from my portfolio I’d save these

Harvey Jones is running through his portfolio of top UK stocks to see which ones he couldn't bear to do…

Read more »

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

I’m aiming for a million buying unexciting shares!

By investing regularly in long-established, proven and even rather dull businesses, this writer plans to aim for a million. Here's…

Read more »

Investing Articles

3 things to consider before you start investing

Our writer draws on his stock market experience to consider a few vital lessons he would use to start investing…

Read more »