After holding steady for modest gains over the last week, AMP Limited [ASX:AMP] shares have shown signs that they may have weathered the storm.
AMP is a financial services and wealth management company.
As covered previously, it has a current market value of $9.34 billion, and has now lost $5 billion in value since the royal commission began.
Why are AMP shares falling?
AMP has recently been under investigation by the royal commission in the past week for charging dead people for life insurance — among other things.
AMP has lost more than 34% over the course of the year.
The company has recently set aside $290 million to pay back customers caught up in their scandal, and increased funding in its compliance department by $70 million.
The rub of the matter lies in whether the share price will rebound in the wake of the scandal.
Which leads us to the most important question.
Is there value in AMP?
With many stocks in the financial services sector, waiting for a scandal to break is often the best way to make money.
If the stock actually hits a bottom, that is.
Knowing when the stock has hit its bottom is the tricky bit.
Some companies, such as Bear Stearns and Lehman Brothers, found the bottom on the scrapheap of history.
Others, such as Barclays in the UK, famously turned things around.
Starting from a low of around 43 pence in January of 2009, in the space of less than a year, Barclays improved to 360 pence.
If AMP recovers from its current scandal, it could well make back a significant amount of its former value. A return to the 8 March level of $5.47 per share would represent a more than 74% return from here.
For Markets and Money
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