Will Ashtead Group plc, Standard Chartered PLC & RSA Insurance Group plc Bounce Back?

Will Ashtead Group plc (LON:AHT), Standard Chartered PLC (LON:STAN) and RSA Insurance Group plc (LON:RSA) recover after major falls?

| 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.

Over the last six months high-flying FTSE 100 companies have been under pressure. Ashtead Group (LSE: AHT), Standard Chartered (LSE: STAN) and RSA Insurance Group (LSE: RSA) are down 12%, 32% and 8%, respectively. Will these stocks continue to slip downwards or is there scope for a bounce-back to previous highs?

US construction sector play

Ashtead Group is a highly cyclical equipment rental company based in the US. Basically Ashtead is a leveraged play on the US housing and construction sectors. In the last six years the company has performed incredibly. Profits have flown from £2m in 2010 to a whopping £303m in 2015 and the share price has responded by rising over 850% in the same timeframe. 

However, in the last year the shares have fallen 28% from the all-time high with the recent pressure on the US economy. Analysts see the construction sector in the US slowing, which has a knock-on effect on Ashtead’s equipment rental business. Any pick-up in the sector could see Ashtead re-test highs. 

Asian financials

The emerging markets specialist Standard Chartered is viewed as one of the weakest UK-listed banks and the share price has reflected this. The share price is now well below the lows seen in 2008/09, currently trading at levels last seen in 1995. 2015 was a terrible year for the bank with a huge loss posted, as well as revenues declining 16%. 

The emerging market issues have hurt the bank and huge impairments have been taken in many of its operating regions. The bank does offer some value sub-500p, but most analysts believe that 2016 may well be worse than 2015 for emerging markets. The Chinese slowdown is also likely to hit the bank hard and reduce the share price further. 

Troubled insurer

RSA Insurance Group is delivering good news to shareholders as the turnaround strategy continues to work well. After a very troubled year or two, the company is making money and its shares have been in demand this year. Even as a FTSE 100 company it’s set to post huge earnings gains this year of over 40% and the PE ratio is due to drop to a low 12.6 in 2017. This illustrates the scope for a nice share price rise in the next year or two. 

Dividend hunters are also beginning to buy the share, although the dividend yield is only 2.5%, as there’s considerable scope for dividend rises. It could become a solid dividend stock in a few years and income investors are attempting to get ahead of the herd. The stock offers good value and should be a top performer in the FTSE in the next few years. 

These three stocks all have issues to overcome but can be expected to post huge rises if all goes to plan. Turnaround stocks can offer the biggest returns and all three companies could post huge share price gains soon. 

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.

Jack Dingwall 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

Happy parents playing with little kids riding in box
Investing Articles

2 FTSE 250 dividend growth stocks I’m considering for passive income

Paul Summers thinks the best dividend stocks to buy are those that consistently return more money to investors every year.

Read more »

Investing Articles

The Compass Group share price looks ready for growth after positive 2024 results

The Compass Group share price is up 4% today following positive full-year results. Our writer considers its prospects in 2025…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

How I plan to build an £86k yearly second income in the stock market

Is it realistic to aim for a substantial future second income by investing in high-quality shares? This writer firmly believes…

Read more »

Investing Articles

Here’s the Vodafone share price forecast up to 2027

Can anything stop the Vodafone share price slide? It's still early days for the company's turnaround plan, so we might…

Read more »

Investing Articles

Down 37%, here’s one of my favourite FTSE 100 bargain shares to consider

This FTSE 100 retailer's shares have collapsed in 2024. Despite tough trading conditions, is now the time to consider buying…

Read more »

Investing Articles

Which do I like best today, Nvidia or Tesla stock?

EV maker Tesla stock is on the up, while Nvidia growth is softening a bit. But they're both in the…

Read more »

Investing Articles

After jumping 15%, my favourite FTSE 250 stock looks set for the premier league

Games Workshop stock recently reached an all-time high, placing it within touching distance of promotion from the FTSE 250.

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

1 top growth stock on my Christmas buy list!

Ben McPoland reveals one top-notch growth stock down 29% that he plans to stuff into his portfolio in time for…

Read more »