There are still 50 days until Christmas, which means there is plenty of time for the traditional stock market Santa rally. When stock markets are of good cheer, the share prices of fund managers and financial advisers typically sharein the fun.
If you are in a festive mood, the following three financial stocks could all give you a seasonal lift.
Aberdeen Sleighed
Investors in fund manager Aberdeen Asset Management (LSE: ADN) certainly need a reason to feel jolly right now. At todays 349p it is well below its 52-week high of 509p, as trouble in China weighs heavily on this Asia-focused investment house.
Its enjoyed an early seasonal lift, rebounding 17% over the last month amid rumours of a buyer for the troubled business rumours that Aberdeen has vigorously denied. Personally, I never like buying on takeover talk, which all too often comes to nought. Without a buyer, Aberdeen has a battle on its hands, suffering large-scale outflows from disappointed investors and a forecast 12% drop in earnings per share (EPS) in the year to nextSeptember. Compare that to the 43% rise Aberdeen enjoyed just five years ago.
If you think the China crisis has been overdone and a bit more stimulus could put things right, todays heady valuationprice of 10.74 times earnings and juicy 5.14% yield could prove atastyChristmas treat. If a buyer does emerge, that would be icingon the cake.
Happy Hargreaves
The last five years have beenone unbroken line of success for advisory groupHargreavesLansdown (LSE: HL) itsshare price is up200% in that time. This is a company that has shown time and again that it understands the retail investment marketplace more than anybody else. It also knows how to make money out of it, while convincing customers that they are getting a good deal. Which, by and large, they are.
The downside of this runaway success is that Hargreaves Lansdown is now trading at 43 times earnings and yields a meagre 1.5%. Can it continue to deliver the explosive growth needed to justify those numbers? A forecast18% rise in EPS in the year to next March suggests it can. It is still piling on new clients, with 24,000 added in the third quarter,bringing its total client base to 760,000. Revenue rose11% to 78.5m. Christmas has already come at Hargreaves Lansdown, but I wouldnt rule out further seasonal cheer.
SchrodersSings
Asset managerSchroders (LSE: SDR)is due a Santa rally, after falling 7.5% over the last six months. Its cause will be helped by todaysstrong third quarter results, which saw pre-tax profits rise 16% to 404.4 million, despite a 27m currency headwind from stronger sterling.
Net inflows of 7bn over the nine months to 30 September have taken total assets under management to 276bn, a good performance given stock market volatility. Schrodersalso boastsa significant pipeline of new institutional business thathas not yet been funded. Ithas delivered90% growth over the last three years, trouncingthe FTSE 100, which returned just 9.3% over the same period.
Schroders, which can trace its history back to 1804, looks to be a steady, well-run business and is priced accordingly at 18 times earnings. The 2.56% yield is solid and reassuringlycovered 2.1 times. Forecast EPS growth is low single digits. Operating margins are somewhat more dramatic at 26% and forecast to hit 36% shortly. This stockisnt just for Christmas.
With the FTSE 100 sagging in recent weeksthis could bethis a great entry point for people looking to build long-term wealth. Some shares.
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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.