Provident Financial plc (LON:PFG) was the subject of conversation when DirectorsTalk sat down with fund manager, Gervais Williams. We asked Gervais which companies have plenty of opportunities in light of current market conditions in The Diverse Income Trust plc’s portfolio.
“Provident Financial, and financial companies in particular, sometimes survive quite well when interest rates rise. They are quite capital intensive. This company really extends personal credit to unconventional lenders – these are people who for some reason don’t have long credit histories and such. The valuation is currently just above five times earnings, which is an unusually cheap valuation for a company with a very strong balance sheet. As this money is generated in the business, it is able to pay a very good return – its yield is around 6.8% (with a share price at 177.0p), quite extraordinary.
So we don’t just see good companies, but also, in our view, companies holding onto very neglected valuations. So there are plenty of opportunities for these in due course, as markets stabilize, as investors start not to worry about the short-term recession or the evolution of interest rates. , so that this type of business not only recovers, but outperforms in the future. ”
Provident Financial plc (LON:PFG) is a specialist bank for UK adults who are not served by traditional lenders. Based in Bradford, England, it specializes in credit cards, online loans and car finance.