Stock markets have recovered their mojo, with the FTSE 100 now rising for three days in succession. The bears are in retreat as fears of a US interest rate hike recede.
With the FTSE 100 down 12% from its April peak and trading at around 15 times earnings, it still doesnt look overvalued. If the market delivers a traditional end-of-year surge, now may look like a great buying opportunity in retrospect.
If you are feeling more bullish, the following two stocks may bea good way to play the upswing.
As aleading emerging markets investment fund specialists,Aberdeen Asset Management (LSE: ADN)has been hithard by troubles inChina, with its share price down 28% over the past year. That hasalso left it temptingly priced at less than 10 times earnings, especially with the yieldat a beefy 5.55%. The share price is up 5% over the last three days, as investors wake up to these numbers and embrace risk again.
Talk of fresh stimulus from China could drive the share price even higher, although the authorities cant postponethe day of reckoning forever, and further volatility is inevitable. Even if markets dorecover Aberdeen still has plenty of hard work ahead, as it will take time to replace recent outflows, which measured a massive10bn in the most recent quarter, as institutional investors cut their exposure to Asia.
Aberdeen is largely at the mercy of global market movements, although worryingly, some of its top fundshave made matters worse by underperforming their benchmarks. It has the security that comes with a plumpnet cash cushion and that generous dividend allows investors to sit things out until emerging markets start swinging again. In the meantime, a takeover cant be completely ruled out, especially if the share price continues to stagnate.
Hargreaves Lansdown (LSE: HL) is up 6% over the last three days as sentiment revivesand the UKs leading investment platform shows it can still make money in tough times.Although recent weeks have taken their toll, itsshare price has been farmore robust thanAberdeens, up 7% over the last 12 months and 183% over five years. Private investors are less flighty than institutional ones, they dont offloadtheir Isasat the first whiff of grapeshot.
Quite the reverse, as Hargreaves has just reported a 13% increase in client growth over the year to 30 June and an 18% jump in assets. That helped offset 20m of lost revenues following its decision to cut client fees, whichshows it has the financial strength to compete in a market where consumers keep a beady eye oncharges.
Markets werent too worried by a 5% drop in operating profits to199m, asHargreaves Lansdown has demonstrated its solidity in bad times as well as good.The downside is that at 33 times earnings and yielding just 1.89%, it isnt exactly available at a knockdown price right now. Even bullish investors will have to grit their teeth to bite at that price.
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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.