The investment prospects of J Sainsbury plc (LON:SBRY) (SBRY.L), HSBC Holdings plc (LON:HSBA) (HSBA.L), Aviva plc (LON:AV) (AV.L) and AstraZeneca plc (LON:AZN) (AZN.L) are the focus of this article. Could they offer stronger performance than the stock market is anticipating?
Sainsbury’s merger with Asda could create a stronger business in the long run in my view. It is set to benefit from synergies, as well as cost advantages, which could improve its competitive position in what remains a crowded marketplace.
Sure, there could be continued weak consumer confidence as the Brexit process moves ahead. However, with Sainsbury’s also set to benefit from cross-selling opportunities as it leverages its Argos segment, I’m optimistic about its long-term prospects.
HSBC could offer improving financial performance in my view. It generates around 8% of its income from the UK and its pivot to Asia may provide it with a stronger growth rate than many of its FTSE 100 industry peers.
Since the stock has a dividend yield of around 6%, I believe that it could offer good value for money at the moment. With further investment in its growth plans, I feel that HSBC could deliver an improving total return.
Aviva’s change in CEO may create a degree of uncertainty in the short run. However, I feel that it is well-placed to deliver improving financial performance in future, with exposure to new and existing markets providing a mix of growth and stability.
Since the stock is investing heavily in acquisitions and in reducing its leverage, I feel that it is well-placed to deliver an improving risk to reward ratio. Since Aviva has a single-digit P/E ratio, I believe that it may be undervalued at the moment.
AstraZeneca’s investment in its pipeline looks set to deliver improving financial performance. The company is due to record a double-digit rise in EPS next year, and this could lead to improving investor sentiment as it moves on from an era of declining EPS due to generic competition.
With AstraZeneca having a PEG ratio of around 1.6, I feel that the stock may be underrated by investors. Alongside potential defensive characteristics, I’m optimistic about its future performance versus the FTSE.