Why I Would Buy Banco Santander SA And Countrywide PLC But Sell Anglo American plc

Royston Wild runs the rule over Banco Santander SA (LON: BNC), Countrywide PLC (LON: CWD) and Anglo American plc (LON: AAL).

| 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.

Today I am looking at the investment case for three FTSE-listed stocks.

Banco Santander

I believe that Banco Santander (LSE: BNC) is an terrific pick for those seeking splendid long-term returns due to its extensive exposure to emerging markets, particularly those of Latin America. With British economic growth also clicking through the gears, and conditions in the eurozone also steadily improving, I believe that demand for the bank’s products is poised to stomp steadily higher.

City analysts expect these factors to underpin a solid 14% earnings uptick in 2015, a reading which produces an ultra-attractive P/E multiple of 12.8 times prospective earnings — a number below 15 times is widely considered very good value. And expectations of a further 13% improvement next year drive the ratio to an even better 11.4 times.

Should you invest £1,000 in Anglo American 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 Anglo American made the list?

See the 6 stocks

Santander put paid to its generous dividend policy back in January when it announced that the full-year dividend for 2015 would not exceed 20 euro cents per share, a huge departure from the payment of around 60 cents delivered in recent years. However, such a dividend still creates a handy-if-unspectacular yield of 2.9%. And with the dividend cutback having shored up the bank’s capital position, and earnings anticipated to surge in coming years, I expect payouts from Santander to step higher again.

Countrywide

Property surveyors Countrywide (LSE: CWD) has been one of the best-performing stocks in Friday business and was recently trading 5.9% higher. Solid investor appetite for the firm comes as no surprise to me given that a combination of supportive lending conditions and government house-buying initiatives are helping to support home sales — indeed, mortgage approvals hit a six-month high in February, at 61,760, the Bank of England recently announced.

The number crunchers expect Countrywide to keep on delivering strong earnings growth in the coming years, and have pencilled in expansion to the tune of 10% and 13% in 2015 and 2016 correspondingly. These figures create attractive P/E ratios of 12.7 times for this year and 11.4 times for 2015, while PEG readouts of 1.2 and 0.9 for these years underline the firm’s exceptional value — any reading around or below 1 is widely considered a steal.

These solid growth prospects are also expected to keep the dividend rattling along nicely, too. The surveyors are anticipated to lift the full-year payout from 15p per share in 2014 to 26.3p this year, and again to 27.7p in 2016. Subsequently Countrywide carries bumper yields of 5% and 5.3% for 2015 and 2016 respectively.

Anglo American

Unlike the two stocks I have mentioned, I believe that investors should beware of investing in diversified mining play Anglo American (LSE: AAL). The business swung to a pre-tax loss of £250m in 2014 from a profit of $1.7bn in the previous 12 months, and I expect further sustained weakness in key commodity sectors to keep the bottom line under pressure.

Indeed, enduring fears of chronic oversupply in the iron ore market drove prices further below the $50 per tonne marker this week to $48, prompted by news that China is set to provide financial support to domestic producers. As well, coal prices — another critical area for Anglo American — are also on the slide as output from Australia, China and the US climbs steadily higher.

As a result Anglo American is expected to record a fourth successive earnings dip in 2015, and a 27% collapse is currently slated. This figure results in a P/E multiple of 11.4 times which, although not excessively high, can still be considered unattractive in my opinion given that worsening supply/demand balances in the digger’s key markets look set to get a lot worse before they get better.

Should you buy Anglo American shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

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.

Royston Wild 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

Investing Articles

Can the Rolls-Royce share price hit £13 in the coming year?

After a stunning couple of years for the Rolls-Royce share price, can it keep up its recent momentum? This writer…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

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

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »