The London stock market has reacted fairly calmly to the reality of a possible Greek exit. Heading into Monday afternoon, the FTSE 100 was down by just 1.4%.
Despite this, several shares on my buy list have lurched lower today, making now a good time to take a closer look.
Standard Chartered
Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) is focused on Asia, Africa and the Middle East. In my view it is the bank that’s least likely to be affected if Greece defaults on its debts and is ejected from the Euro.
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Despite this, Standard Chartered shares have fallen by nearly 3% today, and trade on a 2015 forecast P/E of only 12.
Against this backdrop, Bill Winters, the bank’s new chief executive, is taking decisive action to strip out unnecessary layers of management and cut costs.
According to a recent report in the FT, Mr Winters is also planning to “update, centralise and harmonise the bank’s technology and compliance functions”. What this should mean, in my view, is that Standard Chartered is able to improve its regulatory and spend less doing it.
Mr Winters may yet decide that Standard Chartered needs to raise some fresh cash, but this risk is already reflected in the share price in my view.
Standard Chartered is down by almost 50% from a 2010 high of 1,950p, and trading in-line with its tangible book value. For me, it’s a strong buy.
Hunting
Oil services provider Hunting (LSE: HTG) is heavily exposed to the US shale market, in addition to its activities elsewhere.
At the start of this year, this exposure to the US market was a big concern for investors, who expected the shale market to collapse. However, shale oil production has turned out to be more resilient at lower oil prices than expected.
Although Hunting’s full-year profit is expected to be almost 50% lower than last year, the firm appears well positioned for a medium-term recovery and has made big cuts of its own by reducing headcount by 20%.
Hunting currently trades on 15 times its average earnings from the last four years. That doesn’t seem excessive to me, given the company’s low debt levels and strong track record of growth.
I think Hunting shares remain a decent buy on any short-term weakness.
Unilever
Consumer goods giant Unilever (LSE: ULVR) (NYSE: UL.US) slipped 2% lower today, perhaps because much of its business is carried out in euros, which is also the company’s reporting currency.
As we saw last year, a weak euro can eat into Unilever’s profits.
However, as a long-term investment, I believe Unilever remains very attractive. Earnings per share have risen by an average of 4.2% since 2010 and the firm’s dividend has risen by an average of 6.3% per year over the same period.
Unilever does have a moderately high level of debt, but the cost of this is quite low. For example, Unilever recently borrowed €1.25 billion for 3-8 years at an interest rate of just 1%. That’s cheaper than some European countries can borrow money.
Unilever shares are now down by 10% from their 52-week high and offer a 3.2% prospective yield. That’s close to the FTSE 100 average of 3.5%, but with better growth prospects, in my opinion.
