Will Legal & General Group plc, Hansard Global plc and Chesnara plc boost your portfolio returns?

Are these 3 stocks ripe for investment? Legal & General Group plc (LON: LGEN), Hansard Global plc (LON: HSD) and Chesnara plc (LON: CSN).

| 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.

2016 has been a disappointing year thus far for investors in Legal & General (LSE: LGEN). That’s because the diversified financial services company has posted an 18% fall in its share price, with it showing little sign of mounting a successful recovery.

Yet looking ahead, Legal & General appears to have significant total return potential. A key reason for this is its yield, which currently stands at 6.4% and with its dividends being covered 1.4 times by profit, there appears to be considerable headroom for Legal & General to increase those dividends at a faster rate than its profitability over the medium-to-long term.

On this topic, Legal & General is expected to increase earnings by 7% in each of the next two years. While this is roughly in line with the wider market’s growth rate, Legal & General trades on a price-to-earnings (P/E) ratio of just 11.1, which indicates that there’s significant upward rerating potential. And with it having a diversified range of services and operating on a global scale, Legal & General’s risk/reward ratio appears to be highly enticing.

Should you invest £1,000 in Chesnara Plc 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 Chesnara Plc made the list?

See the 6 stocks

Think long term

While Legal & General has fallen since the turn of the year, shares in investment specialist Hansard (LSE: HSD) have risen by 3%. That’s despite the company being expected to report a fall in its earnings of a massive 52% this year, although it’s due to bounce back with bottom line growth of 16% in 2017. And with its most recent trading update stating that Hansard continues to experience increased new business levels compared to the prior year, its medium-term outlook remains encouraging.

Shares in Hansard currently trade on a P/E ratio of 21.3 and even though this is relatively high, they still offer upbeat capital gain prospects. That’s because when their high rating is combined with their strong growth potential it equates to a price-to-earnings growth (PEG) ratio of just 1.3, which indicates that now could be a good time to buy a slice of the business for the long term.

Value for money

Meanwhile, 2015 was a strong year for life and pension book manager Chesnara (LSE: CSN), with it reporting a rise in gross cash generation of 3.8% as it continued to maximise value from the existing books of business. In addition, the firm’s acquisition of the Waard Group added a further £39.9m in cash and with Chesnara seeking out further acquisitions, its shares could enjoy a boost over the medium-to-long term.

Although Chesnara’s dividend was increased by just 2.9% in 2015, it still yields a mightily impressive 6.4%. With interest rates set to remain low over the medium-to-long term Chesnara could therefore become increasingly in vogue for yield-hungry investors. Therefore, its share price potential remains impressive, with its P/E ratio of 13.7 indicating that it offers good value for money.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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 Legal & General 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

One English pound placed on a graph to represent an economic down turn
Investing Articles

2 top dividend stocks to consider for passive income in May

Our writer thinks these two shares are well worth checking out for investors targeting a growing stream of passive income…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

53% under its fair value, should investors consider buying this FTSE 100 banking gem right now?

This FTSE 100 bank looks extremely undervalued to me following a shift in its key banking strategy towards fee-based rather…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Under £25 now, Shell’s share price looks cheap to me anywhere below £66.43!

Shell’s share price has fallen a lot recently, but this may indicate a bargain to be had. I took a…

Read more »

UK supporters with flag
Investing Articles

5 FTSE 100 shares driving wealth in my Stocks and Shares ISA

Many FTSE 100 shares are doing very well this year in the face of upheaval. Ben McPoland highlights a cheap…

Read more »

Tesco employee helping female customer
Investing Articles

In the next 12 months, experts predict the Tesco share price will be…

Tesco’s dominant position in the UK grocery space is getting stronger, but what does that mean for its share price?…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

Prediction: 12 months from now, the HSBC share price could turn £5,000 into…

With China's first-quarter GDP growth beating expectations, the HSBC share price might be primed to thrive! Here are the latest…

Read more »

Array of piggy banks in saturated colours on high colour contrast background
Investing Articles

Prediction: in the next 12 months, the Lloyds share price could climb to…

With a Supreme Court ruling expected soon, Zaven Boyrazian dives into the latest expert forecasts for the Lloyds share price…

Read more »

Branch of NatWest bank
Investing Articles

1 share to consider for those new to the stock market (and other investors too)

Our writer looks at how those wanting to start investing in the stock market could go about things. But he…

Read more »