Want a free gift with purchase? Buy AMP shares right now: expert

It’s a deal touted on supermarket shelves, shopping centre posters, and marketing emails – free gift with purchase. Could there also be ‘free gifts’ hidden on the S&P/ASX 200 Index (ASX: XJO)? One expert has flagged a major freebie that appears to be on offer from AMP Ltd (ASX: AMP).

Roger Montgomery, founder and chair of Montgomery Investment Management, points out that, at recent levels, the AMP share price doesn’t factor in many of the company’s businesses.

In a way, that makes some of the company’s headline assets free for those buying into the stock.

Right now, AMP shares are trading for $1.195 apiece, 0.84% higher than the stock’s previous close. The ASX 200 has also lifted 0.23% on Tuesday.

So, what major assets could be essentially ‘free with any purchase’ of AMP shares in October? Keep reading to find out.

AMP shares essentially offer plenty of freebies: expert

Around a week ago, Montgomery sat down to prepare an investing brief for AMP shares. Since then, the stock has lifted around 1.4%.

Despite having previously declared the company one “that would not meet most investors’ definition of quality”, the expert’s funds have since bought into the stock.

That’s despite the 76% slide posted by the AMP share price over the last five years. On explaining the funds’ new position in AMP, Montgomery wrote:

We believe … the share price reflects legacy issues and investor anchoring and bias, and fails to acknowledge the turnaround and improvement in quality now underway.

The expert noted the divestment of Collimate Capital will likely see the company with a strong capital position. Meanwhile, its advice division’s losses and its wealth management division’s fund outflows are improving.

Finally, AMP Bank’s growth is outpacing its industry peers, helping to boost the company’s bottom line.

But what about that freebie? Here’s what Montgomery had to say:

With surplus capital of $2 billion, after the sale of assets, and a valuation of over $1.5 billion for the AMP Bank – based on book value – AMP’s market capitalisation of about $3.5 billion, suggests shareholders are receiving the +$100 billion multi-platform AMP North business, the Australian and New Zealand advice business, and a share of a Chinese asset management and pension company, for free. 

Finally, the expert believes that recent progress has delivered “objective evidence” that AMP shares offer “substantial” upside.

The post Want a free gift with purchase? Buy AMP shares right now: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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