Aviva plc isn’t the only value stock I’d buy for retirement

This company could deliver strong growth alongside Aviva plc (LON:AV).

| 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.

Finding the right shares for retirement can be challenging. That’s especially the case given that the stock market is currently trading close to an all-time high. Therefore, unearthing stocks that offer good value for money could be even more difficult than usual at the present time.

However, Aviva (LSE: AV) is one stock that seems to offer a good mix of growth potential and a low valuation. But it’s not the only company that could be worth buying for retirement. Reporting on Tuesday was another stock that could be worth a closer look.

Strong maiden results

The company in question is diversified financial services business TP ICAP (LSE TCAP). It released its first set of full-year results following major changes to its structure. Its integration process is progressing well, as synergy savings were accelerated from 2018 into 2017. It therefore achieved £27m of synergy savings in 2017, which is ahead of its £10m target.

The next phase of its integration will focus on delivering its IT plan, with the overall synergy saving target of £100m by 2020 remaining in place. The business has been able to overcome regulatory change, while so far in 2018 it has reported an encouraging start to the year.

Looking ahead, TP ICAP is expected to report a rise in its bottom line of 21% in the current year, followed by further growth of 17% next year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.7, which suggests that it could deliver impressive returns. And while there are ongoing changes at the company following recent acquisitions, the overall trajectory of its share price could be upwards over the medium term.

Changing business

Of course, Aviva also experienced a period of major change in recent years. It made a number of asset disposals and acquisitions, with it becoming a more efficient entity as a result. The company has been able to generate improving profitability in recent years, and this trend is showing little sign of changing in the near future.

For example, over the next two years Aviva is expected to report a rise in its bottom line of 61% in the current year, followed by further growth of 8% next year. Despite such a positive outlook for the company, it has a price-to-earnings (P/E) ratio of just 9. This suggests that it is undervalued at the present time and may offer growth at a reasonable price. That’s especially the case since it has strong capital generation which may be used to invest in future growth opportunities.

With Aviva having a dividend yield of 5.6% from a payout which is covered almost twice by profit, it appears to be a strong income stock. As such, its mix of capital growth potential and a high income return could lead to a strong performance in the long run.

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 in Aviva. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

How an investor could target a £43k lifelong passive income starting with just £5 a day

Harvey Jones says it's possible to build a high-and-rising passive income by investing small, regular sums in FTSE 100 shares.…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

£10,000 invested in Lloyds shares on 7 April is already worth…

After a dip in early April, Lloyds shares are back to their 30%+ year-to-date gain in 2025. And analysts are…

Read more »

US Stock

What I’d look to buy as the US stock market heads for the worst month since 1932

Jon Smith sifts through the US stock market to try and find some ideas that have fallen in value recently…

Read more »

Growth Shares

Prediction: I think £1,000 invested in this UK stock could double by 2030

Jon Smith runs through a FTSE 250 stock with a market cap just over £1bn that he feels has the…

Read more »

Investing Articles

With £10k in savings, here’s how an investor could target a second income of £500 a month

£10k in savings could be the foundation needed towards a powerful second income. Our writer details some steps necessary to…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing For Beginners

£1k invested in the FTSE 100 on ‘Liberation Day’ is now worth…

Jon Smith talks about the volatility in the FTSE 100 in the weeks since the tariff announcements and flags up…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Barclays’ share price is down 7% from March, so is now the right time for me to buy?

Barclays’ share price has dipped recently, which could mean a bargain to be had. I took a deep dive into…

Read more »

Investing Articles

Down 13% since March, does this rising FTSE 250 defence star look an unmissable buy for me?

The FTSE 250 is currently home to many of the big stock stars of tomorrow and I think this high-tech…

Read more »