Why Lloyds Banking Group PLC & Marstons PLC Offer Irresistible Bang For Your Buck!

Royston Wild considers investment prospects of Lloyds Banking Group PLC (LON: LLOY) and Marstons PLC (LON: MARS).

| 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 two FTSE giants throwing up plenty of value for savvy stock seekers.

Bank on a bargain

Thanks to the improving health of the British economy, I believe that banking goliath Lloyds (LSE: LLOY) is a sound choice for both growth and income investors. The business has seen its share price trend steadily lower since the summer — prices hit their cheapest since April 2014 just this week — but I believe this presents a sound buying opportunity.

Lloyds is expected to enjoy a 2% earnings advance in 2015, resulting in a P/E multiple of just 8.6 times — any reading below 10 times is widely considered exceptional value for money. And despite predictions of a 6% slide next year, the banking giant’s earnings ratio remains at just 9.3 times.

Sure, chief executive António Horta Osório’s decision to scale back Lloyds’ global footprint and re-focus its attention on the British high street may make it less of an exciting growth pick than many of its sector rivals. But such measures naturally make Lloyds less of a risky proposition, a particularly promising signal for dividend chasers.

And when you factor in the fruits of extensive cost-slashing on the firm’s cash pile — Lloyds’ CET1 ratio stood at a healthy 13.7% as of September — the omens look promising for the firm’s recently-resurrected dividend policy. Indeed, the City expects a dividend of 2.4p per share for 2015, yielding a chunky 3.4%. And this figure leaps to 5.3% for 2016 amid forecasts of a 3.8p reward.

Brew up brilliant returns

Like Lloyds, I believe pub operator Marston’s (LSE: MARS) is a splendid stock choice for bargain hunters. The Midlands business announced today that underlying revenues leapt 7% during the 12 months to September 2015, to £845.5m, a result that drove underlying pre-tax profit 10% higher to £91.5m.

The market responded by sending the company’s share price almost 3% higher from Wednesday’s close, and I for one share this current investor optimism. The restructuring programme over at Marston’s helped drive profits higher across all segments, despite the business operating ‘just’ 1,600 outlets at present, down from more than 2,000 just two years ago.

While the closure of underperforming pubs is clearly paid off handsomely, and the company’s vow to open more than 20 new-build pubs in the current period promises to deliver further gains, Marston’s is also benefitting from surging demand for its home-brewed ales. Indeed, the successful rollout of labels like Hobgoblin Gold helped Marston’s enjoy volume growth of 15% last year.

Marston’s is clearly a business with strong momentum, and the City expects earnings to advance a further 6% in the year to September 2016, creating a mega-low P/E multiple of 11.7 times. And when you throw in a projected dividend of 7.3p per share, yielding a market-bashing 4.6%, I believe value hunters will find the brewer hard to overlook.

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 has no position in any shares mentioned. 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

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 »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

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

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »