Why SABMiller PLC, Skyepharma PLC, Persimmon plc And Next plc Are Four Of The Hottest Growth Plays In Town!

Royston Wild explains why the bottom lines over at SABMiller PLC (LON: SAB), Skyepharma PLC (LON: SKP), Persimmon plc (LON: PSN) and Next plc (LON: NXT) are poised to explode!

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I am looking at four of the FTSE’s hottest growth prospects.

SABMiller

For those seeking electric near-term earnings growth, brewing giant SABMiller (LSE: SAB) is likely to disappoint as a combination of emerging-market pressures and adverse currency movements weighs. Indeed, the business is expected to record a 6% earnings slide in the 12 months to March 2016, a prediction that would mark a second successive slip and which would result in a slightly-elevated P/E multiple of 19.9 times.

Still, for more patient investors I believe SABMiller provides the recipe for delicious returns. Not only should the company benefit from rising consumer spending power across Africa, Asia and South America, but labels like Pilsner Urquell, Castle and Coors offer brilliant pricing power that few other can match. As a result, the brewer is expected to snap back with an 8% earnings rise in fiscal 2017, resulting in an improved P/E multiple of 18.2 times.

Skyepharma

Medical play Skyepharma (LSE: SKP) has seen its share price gallop 43% higher during the past three weeks alone, and I believe the firm’s stunning drugs pipeline should deliver further share price growth. The business pleased investors in late August when it advised sales had jumped 19% during January-June, to £40.8m, with flagship asthma treatment Flutiform enjoying a revenues bump of 129% from the corresponding 2014 period.

Like SABMiller, Skyepharma is not expected to light up the bottom line any time soon, however, and a 19% slide is currently pencilled in for 2015, resulting in a heady P/E rating of 23.6 times. But this figure collapses to 15.5 times for next year thanks to predictions of a 43% bottom-line surge. With almost two-thirds of total revenues now sourced from products launched since March 2012, I believe the healthcare play is in great shape to enjoy brilliant earnings expansion in the years ahead.

Persimmon

The housing sector has been the London stock market’s star performer so far in 2015 and Persimmon (LSE: PSN) has been one of the leading lights in this area — the stock has gained a mammoth 34% since the turn of the year. And I expect sentiment towards these companies to remain robust — Barratt Developments advised just today that pre-tax profits leapt 45% during January-June, to £565.5m.

Following today’s update, analysts over at Hargreaves Landsown advised that “a combination of low interest rates, a general lack of new housing supply, rising house prices and increased mortgage availability” helped Barratt during the first half. Clearly Persimmon is also set to continue to benefit from these factors, and the City expects the business to see earnings rise 23% and 11% in 2015 and 2016 correspondingly, creating ultra-low P/E ratios of 13.5 times and 12.2 times.

Next

I piled into retailer Next (LSE: NXT) some time ago, thanks to the steadily-improving state of the UK High Street. But I believe the clothes house still offers plenty of upside, as the dual effect of low inflation and recovering wage growth drives shoppers through the doors — Next saw sales rise 3.5% during the six months to July, a result that once again saw the business exceed prior estimates.

The company now expects revenues to advance between 3.5% and 6% for the full year. And with online shopping fuelling growth at its Next Directory division, and international sales also ticking higher, the City forecasts Next to record earnings growth of 6% for the years concluding January 2016 and 2017. These figures leave the retailer dealing on very-reasonable P/E ratings of 17.5 times and 16.4 times for these years.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild owns shares of Next. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »