2014 has been rather mixed for finance stocks. Indeed, a number of our banks and financial services companies have seen their share prices rise as a result of investor demand for fat yields, as we move away from the impact of the GFC.
Looking ahead to 2015, it seems as though a loose monetary policy is here to stay and, with the Australian economy still performing relatively well (slightly higher than desired unemployment aside), the medium term outlook for finance stocks seems reasonably bright.
With that in mind, here are three finance stocks that could have a great 2015.
QBE Insurance Group Ltd
Having completed an equity placement and debt issuance in recent months, QBE Insurance Group Ltd (ASX: QBE) seems to be in a stronger financial position as we head towards 2015. Certainly, asset sales are being mooted, as the company continues to focus on improving its efficiency and becoming more profitable, but QBE appears to be on the up.
This, of course, is set to be evidenced by a bottom line that is forecast to turn from red to black this year, as the insurer is expected to deliver earnings per share of $0.80 for the year. Although shares in the company have fallen by 7% in 2014, this return to profitability could be the catalyst to make them have a much stronger 2015.
And, with QBE trading on a PEG ratio of just 0.1, it seems to offer growth at a very reasonable price.
Suncorp Group Ltd
While QBE's share price has disappointed this year, Suncorp Group Ltd (ASX: SUN) has delivered stunning gains. Indeed, shares in the insurance and banking specialist have soared by 9% year-to-date and have outperformed the ASX by 11.5% since the turn of the year.
2015 could also see shares in Suncorp perform well. Part of its appeal is a strong track record of dividend per share growth, with them having risen at an annualised rate of over 21% during the last five years. This means that shares in Suncorp now yield a fully franked 5.9% and, with the company's earnings set to rise strongly this year, dividends are forecast to be covered 1.2 times in FY 2016. This shows that, as well as being relatively high, Suncorp's shareholder payouts appear to be sustainable, too.
With Suncorp trading on a PEG ratio of just 0.49, it seems to offer capital growth potential as well as a top income return. As a result, it could be a strong performer in 2015.
Australia and New Zealand Banking Group
While concerns surrounding a property bubble and a general slowdown in the Aussie economy have arguably held back shares in Australia and New Zealand Banking Group (ASX: ANZ) during 2014, 2015 could be a different story.
Indeed, ANZ continues to offer a potent mix of income and value potential that seems to indicate that concerns over the future of the Australian economy are priced in. In other words, its share price appears to offer a relatively wide margin of safety.
For example, shares in ANZ trade on a P/E ratio of just 12, which is 21% lower than the ASX's P/E ratio of 15.2. In addition, ANZ currently yields a hugely impressive (and fully franked) 5.7%, which is likely to remain highly appealing to income-seeking investors.
So, while there could be a few lumps and bumps ahead, especially if concerns surrounding the wider economy remain in play, ANZ could perform well in 2015 owing to its relatively attractive valuation and strong income prospects.
