Is Societe Generale stock a buy right now?

Is Societe Generale stock a buy right now?
Written by:
Stanko Iliev
9th September, 17:59
Updated: 10th September, 19:16
  • Societe Generale's shares fell through support on fears of the coronavirus Covid-19 pandemic environment
  • France bank scrapped its dividend following the coronavirus crisis
  • Societe Generale is a stable bank and one of the most undervalued stocks in the banking industry

Shares of Societe Generale (OTCMKTS: SCGLF) weakened more than 15% in the last three months but despite this, I feel this stock could be a ‘buy” right now. Societe Generale is one of France’s major banks which is based on a diversified and integrated banking model. This bank was usually viewed as primarily a corporate and investment bank, but Societe Generale has important retail banking operations in Russia, North Africa and Europe. Societe Generale employs over 149,000 members of staff in 67 countries and has three complementary core businesses:

  • International retail banking
  • Insurance
  • Financial services to corporates

Fundamental analysis: Stable bank with solid growth prospects

Societe Generale’s shares fell through support on fears of the coronavirus Covid-19 pandemic environment but the recent sell-off created an attractive opportunity to invest in this stock. At the current stock price, Societe Generale could be a very good long-term investment with a generous yield and solid growth prospects.

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The market capitalization of this stock is only 12.6 billion USD which makes Societe Generale one of the most undervalued stocks in the banking industry. Price/Book value is only 0.17 which also makes this stock very attractive for potential investors. Another useful information for the potential investors is that this bank has paid more than 7 billion USD dividends to its shareholders in the last three years.

It is important to mention that the European Central Bank urged banks to pause dividends until January 2021 and Societe Generale will not pay a dividend in 2020. The main reason for this is the Covid-19 pandemic but once the situation has stabilized, the price of this stock will be at much higher levels.

Technical Analysis: If the price jumps above 18 USD it would be a “BUY”

Data source: tradingview.com
Data source: tradingview.com

When we take a look at the chart above ( one year period), we can see that the price of this stock has weakened from 35 USD to 12.6 USD and started to raise. On this chart, I marked current resistance and support levels. The current supports levels are 15 USD and 14 USD, 18 USD and 20 USD represent the resistance levels.

If the price jumps above 18 USD it would be a “BUY” signal and we have the open way to 20 USD. Rising above 20 USD supports the continuation of the bullish trend and the next price target could be located around 25 USD. If the price falls even more in the upcoming period, every price in a range from 15 USD – 10 USD could be a very good opportunity to invest in Societe Generale.

Summary

Shares of Societe Generale could be a very good investment option and most financial analysts are also expecting its price to rise considerably in the next several years. The majority of the metrics point to this investment being highly attractive and the recent sell-off created an attractive opportunity to invest in this stock.

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