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3 Shares That Are Thrashing The FTSE 100: ARM Holdings plc, ITV plc and Marks and Spencer Group Plc

ARM Holdings

Microchip designer ARM (LSE: ARM)(NASDAQ: ARMH.US) specialises in the small-size, low-power devices in mobile phones and tablets.

The latest wave of new mobile products, such as the Sony smartwatch and the iPhone 5s, opens the likelihood of more sales for ARM. This has created a new wave of enthusiasm for ARM stock. In the last three months, the shares are up 21%. The 12-month gain on the shares is 73%.

High-tech companies like ARM are usually valued on expect profits many years out. Provided that the story continues to suggest supercharged growth, the share price stays strong.

While ARM may trade on a multiple of more than 80 times last year’s profits, profits are expected have doubled by 2014.

ITV

Broadcaster ITV (LSE: ITV) has been a major beneficiary of the resurgent UK economy. As advertisers have become more confident, competition for the best slots increases. This means that ITV can charge higher prices. The effect on profits can be dramatic.

This has not been missed by the stock market: ITV shares are up 30% in the last three months. No other FTSE 100 company has managed a bigger rise.

For the first six months of the year, ITV reported revenues 11% ahead of last year. This fed through to a 15% earnings per share (EPS) increase. Management felt confident enough to raise the interim dividend by 38% to 1.1p per share.

The shares trade today at 17.2 times forecast earnings for the year. The expected dividend yield is 2.1%. Double-digit profit growth is forecast for 2014, lowering the P/E to 15.5 times consensus forecasts.

Marks and Spencer

Retailer Marks and Spencer (LSE: MKS) has won the market’s confidence in recent months. Since the FTSE 100 hit a low on June 20th, shares in the company are up 22%.

The July trading statement revealed strong food and online sales but disappointing general merchandise numbers.

M&S is expected to deliver significant EPS growth this year and next. Dividend growth is expected to trail this slightly. On today’s valuation, M&S is rated similarly to the average FTSE 100 stock. While the average FTSE share is on a P/E for the year of 14.2, M&S is on 15.1. Marks offers a better yield, however, at 3.5% versus 3% for the market average.

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> David does not own shares in any of the companies mentioned.