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AMP share price crawling back

Diversified wealth manager AMP (ASX: AMP), which snuck in just before the close of the financial year with a revision to its expected earnings, is beginning to see its share price climb a little higher.

In the immediate days after the announcement the stock fell from $5 pre-announcement to a low of $4.19, a fall of 16.2%. It looks like the share price has settled down now. In what was a down day for the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) yesterday — the index lost 0.7% on Monday — AMP bucked the trend, rising around 1.2% to $4.33.

Certainly the downgrade by AMP is nothing compared with the string of mining service companies that have downgraded. Drillers Boart Longyear (ASX: BLY) and Ausdrill (ASX: ASL) continue to see heavy selling of their stocks, with their share prices yet to recover any lost ground.

Foolish takeaway

Cyclically exposed resource stocks suffer from a lack of earnings visibility and hence a lack of future dividend visibility too. In contrast, with blue chip stocks like AMP, although the market has re-rated the stock, there is still confidence in the outlook for the business and its ability to maintain dividend payments.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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