BAE Systems plc, GKN plc And Rolls-Royce Holding PLC Are Set To Beat The FTSE 100!

These 3 stocks could be worth buying right now: BAE Systems plc (LON: BA), GKN plc (LON: GKN) and Rolls-Royce Holding PLC (LON: RR)

| 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.

BAE

Shares in BAE (LSE: BA) (NASDAQOTH: BAESY.US) have made a superb start to 2015, with the defence company seeing its valuation soar by 14%. This compares very favourably to the FTSE 100‘s rise of 5% year-to-date, with the defence sector gaining a lift due to the market being of the opinion that the worst of the challenging trading conditions caused by defence cuts is now behind it. As such, the future performance of stocks such as BAE is likely to improve significantly.

Despite its recent share price rise, BAE still offers very appealing income prospects. For example, it yields an impressive 3.9% and, with interest rates set to move lower, its mix of long term growth potential and a great yield could prove to be a potent one. As such, BAE seems to be worth buying and seems likely to continue to beat the FTSE 100.

GKN

Despite being in the midst of a challenging period, with its bottom line in decline, GKN (LSE: GKN) remains a very appealing industrial play. That’s because it offers an enticing mix of diversification, with its two main divisions focusing on the automotive and aerospace markets. And, with defence budgets unlikely to be slashed too much further (as mentioned), and the civil aviation and automotive sectors picking up pace, now could be a good time to buy a slice of GKN.

Certainly, its bottom line is forecast to show improved performance next year. That’s because GKN’s earnings are expected to rise by 9% in 2016 and, with the company’s shares trading on a price to earnings (P/E) ratio of just 13.1, it could see its rating move upwards over the medium to long term.

Rolls-Royce

Even though Rolls-Royce (LSE: RR) (NASDAQOTH: RYCEY.US) is enduring a difficult period at the present time, it still offers the potential to beat the FTSE 100 over the medium to long term. That’s because it has an excellent track record of bottom line growth that bodes extremely well for its longer term future. For example, in the last four years it has been able to increase its bottom line at an average rate of 14.5% per annum, which is around twice the growth rate of the wider index.

And, with Rolls-Royce likely to see investor sentiment rise as the global economy continues to improve, now could be a great time to buy a slice of it – especially since profit growth is forecast to return as soon as 2016.

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.

Peter Stephens owns shares of BAE Systems. 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

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

How I’d invest my first £20k ISA to target £4,900 a year from dividend shares

Looking for dividend shares in a new Stocks and Shares ISA, and want diversification too? Here's how I'd go about…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

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

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »