Why this financial services play looks a better buy than AMP Limited

The biggest near term gains in AMP's share price may now be in the past.

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Less than six months ago the $15.5 billion blue-chip insurer and financial services company AMP Limited (ASX: AMP) looked a very appealing investment opportunity. Its share price had dropped to nearly $4, which represented a decade low level that had only been exceeded during the GFC and during a period from mid-2011 to mid-2012.

Fast forward six months to today and AMP's share price is trading near its 52-week high at a price of $5.33. Those recent gains represent a share price surge of 20% and compare very favourably with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), which is up less than 2%.

As a result of those gains, AMP is now trading on a forward price-to-earnings (PE) multiple of 16. While that's not excessive and is lower than some of its peers such as Suncorp Group Ltd (ASX: SUN), it is high enough that outperformance from this point looks less promising.

A better opportunity

Given the very full pricing of many large and small-cap stocks there is a very real risk of overpaying in the current market, but despite the lack of value on display there are still opportunities. One stock which could be worthy of a closer look by investors is stockmarket operator ASX Ltd (ASX: ASX). The near-monopoly provider of equity and futures exchange services is trading on a forward PE of 18.2 and with a forecast fully franked dividend yield of 5%. Given the long-term growth potential and entrenched market position of the ASX, these investment metrics look mighty appealing.

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

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