first_img Tom Chen | Monday, 26th October, 2020 | More on: AV The Aviva (LSE: AV) share price has been hit very hard by the coronavirus pandemic. After starting the year at 423.6p, the stock has fallen to levels not seen since 2009 and is currently down around 34% from the start of the year.As a matter of fact, regardless of the pandemic, Aviva has struggled in recent years and its share price has been stuck in a tight range since 2014. With that in mind, in the midst of every crisis lies a great investment opportunity. Let me explain why I think Aviva shares are a bargain right now.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Aviva share price problemsThe UK-based insurance company faces two main problems – the coronavirus pandemic that has lowered the demand for new insurance policies, and the ongoing Brexit situation that creates uncertainty, especially for financial-related companies. Further, Aviva is facing an embarrassing £450m rebuke over preference shares from the FCA.So far, I believe the company was a bit passive in its response to the coronavirus crisis and the drop in revenues. Besides the new appointment of Amanda Blanc as the company’s new CEO, we haven’t heard too much from Aviva. Looking ahead, there’s no doubt that another economic turmoil could increase the uncertainty for Aviva’s investors. But at the same time, a rebound in Q3 would be unsurprising with the stock market recovery currently in action and the expected British government stimulus deal to maintain the economic momentum.Ultimately, the pandemic has a double sword effect on insurance companies like Aviva. While the coronavirus adds uncertainty to the sector’s outlook, coronavirus-related claims may not be covered by insurance companies, and the demand for insurance policies is actually expected to rise.Aviva: time to buy?While the factors above remain important, they are already priced in the stock valuation. Aviva, which has operations in Europe, Asia, and North America, is still a huge company by any standard, with a market capitalisation of slightly above £11bn.More importantly, Aviva reported a record of £3.2bn in operating profits in 2019 and the company’s financial performance in the first half-year of 2020 was relatively strong. This has led to the board’s decision to pay a second interim dividend of 6p per share for 2019, which basically means that Aviva is once again a paying dividend stock.  To further support Aviva’s financial stability, just a week ago Fitch Ratings has affirmed that the outlooks are stable and Britain’s second-largest insurer was rated at AA.In my opinion, Aviva operates in an industry that will allow it to get stimulus funds if needed. And as governments continue to pour money into the markets, it is more than likely that we’ll see the Aviva share price rebound to pre-Covid 19 levels within the next one to five years. Evidently, the stock’s price-per-earnings ratio of 5.18 is way below the average in the industry and implies that the share price is undervalued. The bottom line is that I think Aviva shares look like a bargain right now. Considering the company’s outlook, I believe they could rise by at least 20% from current levels. Image source: Getty Images. Tom Chen 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. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Tom Chen Our 6 ‘Best Buys Now’ Shares Enter Your Email Addresscenter_img “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Why I think Aviva shares are a bargain right nowlast_img

 Tags: , , , , , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *