Looking back, we know it was an incredible buying opportunity Rolls-Royce When FTSE100 In 2020, the stock was trading for pennies. Down, but certainly not down.

So it’s clear that there may be other opportunities lurking today. I think I noticed one. Here are five reasons why I think Footsie stock could make a robust recovery.

Interest rates

I’m talking about a life insurance company Prudential (LSE: PRU). The company’s shares are currently trading near multi-year lows, after falling 50% in five years. In fact, they recently hit a 10-year low!

One reason is that insurance stocks generally do not have a good reputation. For example, Legal and general information AND Feniks Group have fallen by 15% and 27% respectively over the past five years.

Higher interest rates could impact insurers’ profitability in a number of ways, creating uncertainty. However, rates are set to start falling this year, which should boost investor sentiment.

Improving China’s prospects

However, higher rates don’t explain most of Prudential’s share price weakness. The Asia-focused group is based in Hong Kong and has exposure to the Chinese insurance market.

As we know, the Chinese economy has been sluggish for some time and is suffering from a long-term real estate crisis. Any further economic weakness poses a risk to Prudential’s growth and profits.

However, the outlook for the world’s second-largest economy is improving. In the first quarter, GDP increased by 5.3%, faster than expected. This puts it on track to meet its official annual target of 5%, which is good news for the company.

Share buyouts

Analysts expect Prudential to report earnings per share (EPS) of 97 cents in 2024, representing 55% year-over-year growth. This puts the price-to-earnings ratio at just 9.7.

The inexpensive share price has not gone unnoticed. On June 23, the insurer launched a massive $2 billion share repurchase program. It is expected to be completed no later than mid-2026.

Buybacks tend to escalate EPS because there are fewer shares to split profits between. They can also support a rising share price and be a show of financial strength.

In fact, since the buyout was announced, the share price has already increased by 4.5%.

Dividend growth potential

The company also pays a dividend that is more than four times covered by expected earnings. This suggests that there are great opportunities to escalate the amount of funds allocated to dividends.

And while the yield is just 2.2%, the company said it expects this year’s annual dividend to escalate by 7-9%.

Of course, payouts will depend on the company meeting its financial goals, which is not guaranteed. These include recent business profit increasing at a compound annual growth rate of 15%-20% over 2022-2027.

Not only China

Finally, Prudential’s future growth does not rely solely on Hong Kong and mainland China. It is growing nicely in Thailand and India, while increasing its presence in Africa.

These are markets that, compared to the West, are characterized by low insurance penetration rates, which indicates high growth potential. And the total population is 4 billion!

For all the reasons mentioned above, I think Prudential stock could rebound very strongly from 738p in the coming years. So I’m considering adding them to my portfolio in July.