By the end of the summer, Greece may have been booted out of the single currency, even with the European Central Bank's printing presses running at full tilt. This would see quality stocks such as Standard Life heading higher as trillions of new euros are ploughed into equities.
Standard Life provides its six million customers with life assurance, pensions and fund-management services. Its investment arm is the crown jewel. Funds under management grew 6% in the first quarter to £76.1bn. Its strategy is to keep diverting its life business assets into higher margin products.
A number of other initiatives include corporate Isas and trust-based pension schemes. These are already paying off, with British business sales reaching record levels. The group signed up 26,000 new members in the first quarter with the total number closing at 1.17 million. Further growth should come from pension reforms. The group already administers 35,000 schemes and estimates it could bag 400,000 new savers.
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Standard Life is continuing to move away from capital-intensive annuity business into fee-based services that generate healthier returns. With defined-benefit schemes being shut, it is also seeing an influx of new money into self-select personal pensions. Here it is a market leader with 141,000 clients (a 24% increase on last year). More are expected as generous public-sector schemes close.
Standard Life (LSE: SL), rated a BUY by Berenberg Bank
The group has a strong balance sheet, a capital surplus of £3.1bn and a low exposure (1.5% of loan book) to the indebted European nations. Good progress is being made on costs too. The chief executive, David Nish, is two years into a three-year restructuring and cost-cutting programme that has generated savings of £79m, with a target of £100m for the first half year.
The only slight blip is in the Canadian division, where Nish has pledged to reinvigorate sales. The firm made 32% of its profits from Canada in 2011.
Nonetheless, I'd value Standard Life at a 10% discount to net assets, or about 285p per share. Offering a 6% dividend yield it is a solid play on the regulatory changes due over the next seven months. Interims are due out on 14 August, with Berenberg Bank setting a price target of 275p.
Rating: BUY at 204p
Paul Hill also writes a weekly sharetipping newsletter, Precision Guided Investments. See www.moneyweek.com/PGI , or phone 020-7633 3634 for more information.
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