When stock markets fly, financial stocks typically fly higher. This weeks impressive FTSE 100 rebound has been great news for some of the top financial services companies listed on the index.
These fabulous five are all flying again: how high can they go?
Aberdeen Heads North
Two weeks ago I describedAberdeen Asset Management (LSE: ADN)as a suffering stock with rebound potential but I didnt expect it to bounce back this quickly. The emerging markets specialist is up more than 15% inthe last week, as investors rediscover their appetite for risk.
Marketsseem to be banking on the proceeds of another Chinese stimulus package, which hasnt yet been confirmed.Yet this weeks recovery isundeniably encouraging, and trading at 10.66 times earnings and yielding 5.17%, Aberdeen is stillvalued to go.
Hargreaves Wins Hands Down
China isnt the only reason markets are flying: investors are also celebrating theperpetually deferred US rate hike. Hargreaves Lansdown (LSE: HL), the UKs most popular IFA, is up 5% over the last week. Always anxious to protect its bottom line, Hargreaves has switched away from offering full-blown independent financial advice to a more restricted service, in a bidto keep its regulatory costs down.
Its share price has stood up well even when markets have been falling, a fact reflected in its pricey valuation of more than 37 times earnings and lowly 1.67% yield. Hargreaves has been pricey foryearsbutso far, it has been a price worth paying.
The Feeling Is Mutual
Three weeks ago I had this to say aboutOld Mutual (LSE: OML): With the share dropping 15% in the last three months, now could be a good time to buy. And so it proved, with the Anglo-South African company rising more than 9% in the last week alone.
It was helped by a positive note from Barclays, which said the stock is under priced, hasa robustemerging markets operation, and has de-risked its balance sheet. It upgraded Old Mutual to overweight which looks a good call to me, especially with the stock trading at just 11.59 times earnings and on a forecast yield of 4.60%.
Taming Of Schroders
Given all the fun of the financials, I expected asset managerSchroders (LSE: SDR)to have done better this week, but it is up just 3.5%. Trading at 17.19 times earnings and yielding just 2.70%, it looks fully valued compared towealth managers Aberdeen and Old Mutual.
TheSchroders share price has had a solid five years, in defiance of turbulent stock markets. It is up an impressive 25% over the past 12 months, while the FTSE 100 wasflat over the same period. Last month I said that Schroderscould be a great risk-on stock when investors get their appetite back. As it turned out, it wasnt quite risky enough.
Wealth managerSt Jamess Place(LSE: STJ) has enjoyed a storming five years rising 225%. It is up another 5% in the last week. The story here seems the same as at Schroders, only more so. Trading at over25 times earnings and yielding around 2.5%, the stock isntexactly abargain.
If you expect the recent bull runto continue and are looking for under-priced financials, Aberdeen Asset Management and Old Mutual could be the place to start. Risk-on!
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen Asset Management and Hargreaves Lansdown. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.