With abdrn shares up 35% from their low, do I buy?

Between November 2021 and October 2022, abdrn shares collapsed, losing more than half of their value. But after surging 35% since, are they still cheap?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Photo of a man going through financial problems

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The past 12 months have delivered a brutal beating to abdrn (LSE: ABDN) shares. Indeed, the shares crashed by more than half in an 11-month period. But they’ve since bounced back hard, so is it time for me to buy shares in the investment firm formerly known as Aberdeen?

A terrible 2022 for the shares

In January 2018, the shares were riding high and briefly exceeded £5. Alas, it’s been pretty much downhill ever since for the Edinburgh-based investment company and asset manager. Here’s how the shares have performed over the short and medium term, based on the current share price of 177.2p:

One day2.1%
Five days7.8%
One month30.8%
Six months-1.0%
2022 YTD-26.4%
One year-32.9%
Five years-62.7%

As well as crashing almost a third over the past 12 months, they’ve lost almost two-thirds of their value in the last half-decade. Even after adding in cash dividends worth a few percentage points a year, this stock has been a loser for long-suffering shareholders.

Should you invest £1,000 in SSE right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if SSE made the list?

See the 6 stocks

At their 52-week high on 11 November 2021 — almost a year ago — abrdn shares briefly hit 265.3p. But then they collapsed spectacularly over the next 11 months. On 10 October, they imploded to a 52-week low of 131.03p. That’s a fall of more than half (-50.6%). Crikey.

The share price makes a comeback

That said, the share price has surged dramatically over the past month. Since last month’s low, it has soared by 46.2p, shooting up by 35.2% in under a month. This must come as genuine relief to its shareholders, both retail and institutional.

Had I noticed the shares slumping so low last month, I’d have definitely bought into this cheap stock at a huge discount to its 52-week high. However, I was on a sabbatical from working, so I failed to spot abrdn’s descent.

Are the shares still cheap today?

Having missed out on an excellent opportunity to buy this stock while it was in the bargain bin, would I buy abrdn shares today?

At the current share price, abdrn is valued at under £3.7bn. If I had this sum to hand, I’d happily buy the entire business at this modest price tag. What’s more, with a lowly price-to-earnings ratio of 6.4, the shares offer a market-thrashing earnings yield of 15.7%.

In addition, they offer a mouth-watering dividend yield of 8.2% a year — twice the cash yield on offer from the wider FTSE 100 index. Even better, this cash yield is covered 1.9 times by abrdn’s trailing earnings, which is a wide margin of error.

Now for the bad news. As a major UK asset manager, abdrn’s revenues, earnings and dividends are heavily geared towards the success (or otherwise) of global capital markets. Hence, the group’s results could be harmed if global stock, bond and property markets do poorly in 2023.

Even so, I suspect some of this bearish news is already baked into the shares today. Hence, I’d happily buy this stock right now — if only I had some spare cash to invest, that is!

Created with Highcharts 11.4.3aberdeen group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Of course, there are plenty of other passive income opportunities to explore. And these may be even more lucrative:

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »