Unilever plc, Domino’s Pizza Group PLC & National Grid plc Have All Leapt ~10% In A Month And STILL Look Cheap!

Royston Wild runs the rule over recent FTSE risers Unilever plc (LON: ULVR), Domino’s Pizza Group PLC (LON: DOM) and National Grid plc (LON: NG).

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Today I am looking at whether three recent London rockets have the fuel to keep on surging.

Unilever

From Cornetto ice creams and VO5 shampoo, right through to Persil washing powder, diversified goods manufacturer Unilever (LSE: ULVR) has proven itself a winner when it comes to building a product portfolio with a hefty footprint across the home. And the splendid pricing power of these labels has enabled earnings to keep chugging higher even in times of wider macroeconomic pressures.

Unilever has seen its share price shoot skywards in recent weeks — thanks in no small part to yet another encouraging trading update — and the business has gained 15% during the past month. Latest financials showed like-for-like sales steam 5.7% higher in July-September, accelerating from 2.9% in the previous quarter and underpinned by an 8.4% sales surge in developing markets.

At face value, a P/E ratio of 22.1 times for 2015 — some distance above the benchmark of 15 times that indicates decent value — suggests that Unilever may not have much room for further gains. I do not subscribe to this notion, however, and believe the firm’s massive popularity with consumers, vast array of industry-leading brands, and pan-global presence fully justifies a heady rating. And I expect Unilever to add to the 10% earnings gain projected for this year alone.

Domino’s Pizza Group

Investor appetite for dough rollers Domino’s Pizza (LSE: DOM) has exploded in the past few weeks, driving the stock 18% since the corresponding point in September and reaching fresh record highs above £10.30. But I believe the stock has much further to go as Britain’s takeaway culture shows no signs of abating.

Like Unilever, the fast food specialists benefitted from a positive set of financials during the past month. Domino’s reported that group revenues surged 19.4% during July-September, to £214.5m, driven by continued strength in its core UK operations — sales here advanced by more than a quarter from the same period in 2014.

With Domino’s having thrown shedloads at its digital business, and improving consumer spending power across Europe helping to drive revenues, I fully expect earnings to continue to accelerate in the months and years ahead. Indeed, a 22% bottom-line rise is anticipated for 2015 alone, and although this creates a high P/E multiple of 30.5 times, I reckon the prospect of further double-digit earnings rises in the years ahead offsets this reading.

National Grid

Power play National Grid (LSE: NG) has been a major beneficiary of the drive towards defensive stocks in recent months. The company has seen its share price ascend 9% during the past four weeks alone, and with a flurry of economic factors still troubling the markets — from the fallout of the Volkswagen emissions scandal through to fears of Chinese economic cooling and the timing of Federal Reserve rate hikes — I believe the stock could continue its surge higher.

And unlike utilities plays like Thames Water or, more famously, energy suppliers like Centrica, National Grid’s vertically-integrated structure does not leave it at the mercy of draconian, profits-smashing action from regulators in the near future. In addition to this, RIIO price controls in the UK are also helping to reduce capital seepage at National Grid, another promising sign for future earnings.

As one would expect, the bottom line at National Grid is not expected to take off any time soon, and a 1% rise is currently anticipated for the 12 months to March 2016. Still, one does not invest in such companies in anticipation of rip-roaring growth, while a P/E rating of 15.8 times offers very decent value. When you also factor in a giant 4.7% dividend yield, I reckon National Grid offers great bang for one’s buck regardless of recent stock price gains.

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 Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Domino's Pizza. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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