Stock market volatility has thumpedshare prices across the board. The trick now is to work out which stocksare out for the count, and which can make a fighting comeback.
Aviva revival
Ive been waiting years for my bet on insurance giant Aviva (LSE: AV) to pay off and my patience continues to be stretched, with the stock down 13% in the last month alone. The big insurershave shrugged off local threats, notably Chancellor George Osbornes pension freedom reforms, but the globalrouthas punished prices across the sector, with Legal & General Group and Prudentialdown around 15% over the last month.
Solvency II regulations and the Brexit referendum have added to the uncertainty and investors can expect plenty morevolatility. The share price slump has at least revived Avivas yield (now a solid 4.2% covered 2.7 times). Itsvaluation of just 8.9 times earnings would be exciting if I didnt keep reading articles about how were heading for a global recession. Forecast earnings per share growth of 11% this year to 49.58p a share is promising. Aviva lookslike a buybut I thought that four years ago. It may stretch your patience before the recovery comes.
Glencore holding
What a difference a week makes. Stricken mining giant Glencore (LSE: GLEN) is up 13% over the last five trading days and 18% over the month, as commodities tookeverybody by surprise (me included) by bouncing back into favour. I remain unconvinced by the rally asChina isnt out of the woods yet and nor is the global economy. I still dont think this is the time to invest in a company carrying$30bn of net debt, which has forced managementto launch a $13bn fundraising campaign to reassure investors.
Glencore guarantees plenty of excitement, and as we saw last week, the chance of making a fast buck for nimble/lucky traders. Commodities could get a further boost withthe US dollar likely to weaken further as the steam goes out of its economy. Brokers are surprisingly positive about Glencore, withJP Morgan overweight with a 130p target and Credit Suisse neutral toowith a target of 130p. Thats a near 25% upside on todays 105p. I would urge caution on buying on the back of last weeks bounce. Do I smell a dead cat?
Banco bonanza
Bad news out of China is obscuring disastrous news from Brazil, perhaps the last major economy I would choose to invest in right now. Theres an ugly knock-on effect for BancoSantander(LSE: BNC)because Brazilisits second biggest market, generating around onefifth of its earnings. Santanderstill posted a 33% rise in full-year total attributable profit to 1.63bn in Brazil, despite its troubles. It also put on a solid show in mature UK and Spanish markets and attracted another 1.2m customers across the business, for a total13.8m.
Santanders share price has been relativelystable over the last month, fallingjust 5%, against a drop of 18% at Barclays, 13% at Lloyds Banking Group and 10% at HSBC Holdings. Itsprice-to-book value of just 0.61 suggests theres value to be had. These are also troubling times for banking stocks as we head for years of low interest rates, which gives them little scope to boost net interest margins, whileimpairments may finally start rising at some point. Santander has performed well, however, and its 5.14% yield istempting.
These three stocks can still pack a punchbut I reckon there are more solid growth prospects on the UK market today.
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Harvey Jones holds shares in Aviva and Prudential but he has no position in any other 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.