Shares in HSBC (LSE: HSBA) have fallen by 22% since the turn of the year and there seems to be little hope of a turnaround in the short run. That’s because the global bank is forecast to post a fall in its bottom line of 4% this year, which could hurt investor sentiment and cause it to underperform the wider index.
However, with HSBC being in a transitional phase, which is seeing costs cut across the business as it seeks to become a more efficient entity, its medium-to-long-term outlook remains positive. This view is evidenced by the 9% forecast rise in earnings for next year, with HSBC’s longer-term future likely to be very bright due to its position within what could become a highly lucrative Asian market for financial services companies.
Furthermore, HSBC trades on a price-to-earnings (P/E) ratio of just 9.4 and yields a whopping 8.5%. Both of these figures indicate that the company’s shares are dirt cheap and while there may be further challenges ahead, HSBC seems to offer growth, value and income potential. Therefore, buying now could prove to be a very wise move.
Long-term buy
Also falling of late have been shares in Provident Financial (LSE: PFG), with the lending company posting a fall in its share price of 12% since the turn of the year. Clearly, there are concerns surrounding the potential for a higher interest rate over the coming years and the impact this will have on default rates and also on demand for new loans. However, with Provident Financial expected to record a rise in its earnings of 16% this year and a further 12% next year, its financial performance looks set to remain very upbeat.
Furthermore, following its recent share price fall Provident Financial now trades on a price-to-earnings-growth (PEG) ratio of just 1.3. This shows that it offers good value for money as well as upbeat growth prospects, with its shares currently offering a relatively wide margin of safety. This means that even if forecasts are downgraded somewhat due to external challenges, Provident Financial could still prove to be a profitable buy for the long term.
Meanwhile, shares in asset management company Miton (LSE: MGR) have fallen by around 30% today after it announced the departure of two fund managers. This has clearly unsettled the market, since the two individuals managed what has become an important fund for the company, with it accounting for 29% of the company’s total assets under management.
Clearly, this is an uncertain time for Miton and while its shares had performed well in the earlier part of the year, they’ve reversed all of their gains to be down 3% for 2016 at the time of writing. While the company’s recent results showed that it’s making progress, it may be prudent to await further news before considering the purchase of shares in Miton.
