The share price performance of Santander (LSE: BNC) in 2015 has been rather surprising. After all, the outlook for the European and global economies has been relatively upbeat and, while there are still uncertainties in China and regarding interest rate rises, the long term prospects for the banking sector are reasonably healthy.
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Furthermore, Santander conducted a successful placing last year, which shored up its financial position and allowed it to maintain its high level of regional diversification, meaning that its financial performance should be relatively stable moving forward.
In addition, Santander increased its bottom line by 23% last year, and while dividends were slashed they are far more sustainable now that they are covered 2.6 times by profit. And, with the company due to post a rise in earnings of 6% this year and 8% next year, its share price fall of 31% since the turn of the year seems very much overdone. So, with a price to earnings (P/E) ratio of just 10, Santander seems to be a very attractibe buy at the present time.
Considerable appeal
Similarly, Prudential (LSE: PRU) also offers excellent total return potential. It has a very envious track record of having increased its bottom line in each of the last five years and is forecast to post a rise in earnings of 14% this year followed by further growth of 9% next year. This puts it on a price to earnings growth (PEG) ratio of only 1.3 which, for a diversified financial major, seems to hold considerable appeal.
Furthermore, Prudential has clear long term growth potential, and occupies a leadership position in a vastly under-penetrated Asian market. For example, the rising middle class in China and India appear to be under-insured and lacking in traditional savings products, which creates a growth opportunity for Prudential in the coming years. And, with a yield of 3% from a dividend which is covered 2.8 times by profit, it could become an excellent income play, too.
Strong performer
Meanwhile, shares in technical plastics supplier Carclo (LSE: CAR) have sunk by 12% today after it released a profit warning. Although it has traded well ahead of the same period last year, and in-line with its expectations for the first half of the year, Carclo expects that the likely impact of VW’s decision to launch its flagship luxury vehicle as an all-electric version will mean that its full-year performance will be marginally below previous expectations.
And, while the full impact of VW’s decision is not yet known, Carclo expects it to mean a delay in the launch date (which was planned for 2017) and therefore will affect the timing of anticipated related revenues for its Wipac business.
Despite today’s disappointment, Carclo remains a relatively appealing long term buy. It trades on a forward price to earnings (P/E) ratio of just 10.2, yields 2.3% and, while its outlook is relatively uncertain, it could prove to be a strong performer.