It’s finally spring. The fresh, crisp air and the sunshine glimmering through the trees hints of better times ahead. This is when many investors think of renewing and refreshing their portfolio.
With the FTSE 100 falling from its highs, the stock market is suddenly bursting with cheap companies. Now really is the time to buy shares. If I were buying, here are the three companies I would invest in right now.
Quindell
I bought insurance outsourcer Quindell (LSE: QPP) last year at 12p. When I made it one of my tips of the year it stood at 17p. The current price is 39p. So far I have triple-bagged, and investors who followed my tip have double-bagged. So you might be surprised to hear that I believe, more than ever, that these shares are a buy.
Why am I so optimistic about this company? Because I think this company has a key stake in the future of insurance, specifically in the areas of insurance outsourcing and telematics-based insurance.
Quindell has got the fundamentals of insurance outsourcing down to a t. It is the global market leader in this area, and is expanding across Europe and North America.
And then there is telematics-based insurance, where black boxes are fitted to cars, providing information to insurance companies about how safe a driver you are. This both reduces premiums and saves the insurance industry money, and is a trend which is likely to take off over the next few years. With its recent deal with RAC, Quindell is also setting the pace in this area.
The simple numbers show how cheap Quindell is: even after recent share price rises, Quindell is on a 2014 P/E ratio of 9.6 and a 2015 P/E ratio of just 6.7.
 Tullett Prebon
In the eternal zigzag of stock prices, financials have just ‘zagged’, i.e. taken a downward turn. So now is the time to buy the banks and the brokers. In particular Tullett Prebon (LSE: TLPR) has fallen substantially and, with a P/E ratio of 8.7 and a dividend yield of 5.7%, it really is a bargain.
I think that financials are on the path to recovery, and their share prices are on an upward trend. So this share is just too cheap, and is a clear buy.
Lloyds Banking Group
What has really surprised about the economic recovery is the strength of the housing boom. But, if we analyse the fundamentals: low interest rates and mortgage rates, low inflation and falling unemployment, all the ingredients are in place to have a resurgent housing market.
The volume of house purchases is increasing, and with interest rates likely to rise next year, Lloyds’ profits are forging ahead. The bank’s 2014 P/E ratio is 10.5, falling to 8.8 in 2015. I expect the dividend soon to be restored, with perhaps 70% of earnings paid out as dividends by 2015 — yet another reason why you should invest in Lloyds.