Cruise operator Carnival (LSE: CCL) has enjoyed a bit of a comeback of late, with its shares up 81% since mid-October to 3,751p. Full-year results released in December gave an extra lift after the firm reported a 40% rise in earnings per share (in dollar terms) and told us that “cumulative advance bookings for the first three quarters of 2016 are well ahead of the prior year at slightly higher constant currency prices“.
We’re still awaiting updated forecasts for 2015, but the last we had available suggested a further 45% boost to EPS this year, and with chief executive Arnold Donald having told us that Carnival is “well positioned to achieve our double digit return on invested capital threshold in the next two to three years,” that doesn’t seem over-optimistic.
The shares are on a forward P/E of around 18. That’s a little ahead of the FTSE 100‘s long-term average, but with these growth expectations I see this as a potentially profitable purchase. And on top of growth, we also see a progressive dividend policy. Yields are only around 2%, but the cash is being hiked well ahead of inflation. And Carnival has reiterated its long-term aim to return cash to shareholders through dividends and share repurchases.
More house growth?
Is it really likely that the UK’s housebuilders will continue their strong run and reward us with further growth? Looking at Barratt Developments (LSE: BDEV), I think the answer is yes.
The share price has levelled off a bit in the past six months, but we’re still looking at a 12-month rise of 44% to 595p, and a six-bagger over five years. The massive growth in annual EPS of the past few years is set to slow, but there’s still an 18% rise on the cards for the year to June 2016 . And at the current price, that would put the shares on a forward P/E of only around 11.5.
If that doesn’t sound cheap on growth alone, in its 2015 final results in September the company announced a plan to return extra cash to shareholders through special cash payments in addition to ordinary dividends. There has already been one special payment so far, and there’s a total dividend yield of 4.9% currently forecast for this year.
Strength in Insurance
Shares in Legal & General (LSE: LGEN) have more than doubled in five years, to 241p. But with the rise flattening-off over the past 12 months, are we seeing a nice buying opportunity now? I think so.
The insurer has recorded double-digit EPS growth in each of the past three years, and for the year just ended in December 2015 the analysts are expecting to see a further 14% growth. We’ll know when results are released on 15 March, but everything was looking positive at Q3 time with net cash generation up 14%.
EPS growth is expected to slow to 7% in 2016, but that would drop the P/E to just a little over 12. And with dividends expected to yield 5% for 2015 and 5.4% in 2016, the shares look good value to me.
