3 Of The Best Finance Stocks? Aviva plc, Royal Bank Of Scotland Group plc And IG Group Holdings plc

Are these 3 finance stocks worth buying right now? Aviva plc (LON: AV), Royal Bank Of Scotland Group plc (LON: RBS) and IG Group Holdings plc (LON: IGG)

| 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.

One company which is extremely happy about the high levels of volatility present at the moment is spread betting provider, IG (LSE: IGG). It benefits from increased volatility, since it means trading shares and other instruments becomes more popular. As the company’s recent update shows, August was unusually busy and IG was able to post a 24% rise in revenue versus the same quarter of last year.

Clearly, high levels of volatility are unlikely to last indefinitely but, even if markets do become more subdued, IG appears to have a very bright future. It remains a relatively resilient player in an industry that is constantly evolving and appears to have at least a degree of customer loyalty. This should help it to maintain a high degree of profitability and, looking ahead, it is forecast to post a rise in its bottom line of 10% next year.

This rate of growth may not be as high as a number of IG’s index peers but, with its shares having a price to earnings growth (PEG) ratio of 1.6, they seem to offer significant upside over the medium to long term.

Similarly, Aviva (LSE: AV) is a finance stock with a bright future. Its merger with Friends Life appears to be progressing as planned and the main benefit for investors in Aviva is the synergies that could be realised in the coming years as well as the enlarged group becoming a dominant force within the life insurance marketplace.

In the near term, Aviva continues to offer index-beating profit growth. Its bottom line is expected to rise by 10% next year and yet the market is still not getting excited about its future prospects. Evidence of this can be seen via Aviva’s price to earnings (P/E) ratio of just 9.9, which could easily rise by a third or even a half and still be reasonably priced. As such, being a contrarian investor and buying a slice of Aviva after its 6% fall since the turn of the year could prove to be a shrewd move.

That’s also the case for RBS (LSE: RBS). It remains a rather unusual investment opportunity in so far as it is a large company which is highly profitable with a bright future – and trades at a huge discount to its net asset value. In fact, RBS has a price to book value (P/B) of only 0.6 and, as a result, its shares could rise significantly over the coming years.

Of course, the government’s share sale is a likely reason why RBS is so cheap at the present time. Certainly, this may dampen investor sentiment in the stock but, on the flip side, it shows that RBS is able to come off life-support and operate as a fully private (i.e. not nationalised) bank. With a sound strategy, appealing asset base and the potential for an economic tailwind, RBS appears to be a stunning buy for the long term.

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 and Royal Bank of Scotland Group. 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

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Here’s the worst thing to do in a stock market crash (it isn’t selling)

When the stock market falls sharply – as it does from time to time – selling is often a bad…

Read more »

New year resolutions 2025 on desk. 2025 resolutions list with notebook, coffee cup on table.
Investing Articles

My top 2 growth shares to consider buying in 2025

For investors looking for top growth shares to buy in the New Year, I reckon this pair are well worth…

Read more »

Investing Articles

3 massive UK shares that could relocate their listing in 2025

I've identified three UK companies that may consider moving their share listing abroad next year. What does this mean for…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

2 common mistakes investors make with dividend shares

Stephen Wright outlines two common mistakes to avoid when considering dividend shares. One is about building wealth, the other is…

Read more »

Investing Articles

Here’s how I’ll learn from Warren Buffett to try to boost my 2025 investment returns

Thinking about Warren Buffett helps reassure me about my long-term investing approach. But I definitely need to learn some more.

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Here are the best (and worst) S&P 500 sectors of 2024

While the S&P 500 has done well as a whole, some sectors have fared better than others. Stephen Wright is…

Read more »

Investing Articles

2 FTSE 100 stocks I think could be takeover targets in 2025

If the UK stock market gets moving in 2025, I wonder if the FTSE 100 might offer a few tasty…

Read more »

Young Asian woman with head in hands at her desk
Growth Shares

Are these areas of the stock market in a bubble as we approach 2025?

Certain areas of the stock market have felt a little frothy in recent weeks. And Edward Sheldon believes that investors…

Read more »