Does the Aviva share value make it the FTSE 100’s greatest worth purchase?

I maintain making an attempt to resolve which is one of the best FTSE 100 inventory to purchase. And it normally comes right down to a selection among the many similar handful. Immediately, I’m this yr’s Aviva (LSE: AV.) share value falls… and I like what I see.

One other dangerous yr

Aviva shares have dipped one other 12% up to now in 2023. And that brings them to a five-year lack of 40%.

Saying that, anybody sensible sufficient to have purchased proper after the Covid crash could be sitting on a pleasant revenue now. Not that I did. No, I purchased in a while earlier than that.

Nonetheless, it doesn’t make sense to strive timing our buys. That’s as a result of we simply can’t inform what may occur subsequent month, subsequent week, tomorrow. The pandemic made that clear.

Lengthy-term readability

The pandemic additionally made one thing else clear to me. Even the most important inventory market crashes are likely to rapidly vanish and simply appear like blips on the long-term chart.

I imply the FTSE 100 is down solely 3% over 5 years, which is only a blink of the attention for a long-term investor. And that’s after the most important international disaster we’ve seen for many years.

Inventory valuation

Lengthy-term valuation is what counts, and I believe the low Aviva share value makes it very engaging.

On headline measures, we’re a forecast price-to-earnings (P/E) ratio of solely 7.5, about half the Footsie’s long-term common. And the Metropolis expects a dividend yield of greater than 8%.

Now that each one may look good if an organization isn’t in any bother. However, let’s face it, the insurance coverage enterprise can come beneath a whole lot of strain in financial onerous occasions. And the most recent figures present the UK economic system shrank in Might. So, sure, onerous occasions.

Firm refocus

Aviva goes via a refocus of its personal too. In recent times, it’s been a great distance from the leanest or most effective within the sector. So these shying away from insurers basically could be even much less eager on Aviva.

Does all this imply Aviva is one to keep away from? It could be, for these with a short-term outlook and who need to minimise danger. Oh, and for investing companies that may’t see previous the subsequent quarter and don’t need to be seen holding this yr’s losers.

However for long-term buyers who don’t thoughts a little bit of danger, I believe we’d have a glowing alternative to purchase in cheaply.

Sentiment change

Sentiment is in opposition to Aviva shares proper now, however sentiment adjustments. And seeing how the primary half has gone could be one of many issues that does it.

H1 outcomes are due on 16 August. I’ll be largely searching for liquidity and money circulate measures. In the event that they’re wholesome, and dividend prospects look good, I’d purchase some extra.

Aviva isn’t the bottom danger inventory within the FTSE 100, not by a way. And insurance coverage shares will be cyclical and risky. However it could be the Footsie’s greatest contrarian inventory to purchase proper now.