Should You Buy AMP Limited Group Ltd Shares Today?

What Happened to the AMP Share Price?

AMP Limited [ASX:AMP] was down slightly today. The stock was trading at $6.51a share at 1:05pm, a 0.69% drop from the previous day. ‘Bearish oil’ is back and the market is being punished by the weak oil price. Energy producers and miners were down. However, the market did manage a rebound between 11am and the early afternoon.

Why Did This Happen to AMP Shares?

Are you a momentum investor? AMP shares are a clear momentum play right now and long–hold investors are loving it.

Roll back 10 years and you’d find yourself at the height of AMP’s stock price. The share was trading above $10. However, AMP fell dramatically to a low of less than $4 in 2012. Now the stock has recovered back to more than $6.

Compare that to the ASX 200 index. If you invested in the main index, you would have made a 40% gain over the last 10 years. If you bought and held onto your AMP shares, you are still 20% down today.

Roll back five years and you would still have done much better with the ASX 200. Now, roll back one year. Your AMP shares would have given you a 30% gain while the ASX has generated less than 10%.

Could it be that AMP is finally getting its act together?

What Now for AMP Limited?

In the latest full year results, the company’s profit jumped 23%. Its revenue growth has raged ahead with double digits. Dividend yield was higher this time round and cost was brought down. The company’s asset base has grown by 9%.

With such a solid result, market analysts are giving AMP an average rating of ‘hold’. The reasons are many. The company has had a rather inconsistent track record in recent years. It is still dealing with uncertainties in its insurance division. The company may also be too expensive at this point.

Investors need to bear in mind that AMP is a major financial in the Australian market. It closely tracks the movements of the ASX. However, it is both punished severely and rewarded handsomely by bad and good performances, respectively. This makes it a good momentum play for investors. The question is, ‘why not cash in when things are going well?’

Ken Wangdong
Emerging Market Analyst, New Frontier Investor

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