Today I am looking at three London stocks providing plenty of scope for bargain hunters.
Banco Santander
I have long been bullish over banking goliath Santander (LSE: BNC), its hefty exposure to developed and emerging markets alike giving it the best of both worlds. Sure, a backcloth of rising inflation and slowing economic growth in Latin America is presently giving the company a headache — profits from this region slipped 11% in July-September from the previous quarter due to adverse currency movements.
But in the long-term I believe rising wealth levels in Latin America, combined with Santander’s ambitious product roll-out and expansion programmes on the continent, should deliver smashing returns. And in the near-term, steady economic growth in its established regions should keep earnings steadily rising — indeed, the bottom line is expected to increase 3% and 5% in 2015 and 2016 correspondingly, resulting in cheap P/E ratios of 10.4 times and 10 times.
And Santander is also a great value pick for dividend chasers too, in my opinion. A pledged dividend of 20 euro cents per share for 2015 is a huge comedown from rewards of previous years, but this readout still yields a brilliant 3.9%. And I anticipate dividends to grow again following this year’s rebasement as earnings gather momentum.
Prudential
Like Santander, I reckon that insurance house Prudential (LSE: PRU) should reap the rewards of galloping incomes and increasing populations in new markets, and more specifically those of Asia. Indeed, the company plans to rename its Prudential Investment Management arm with effect from January — to PGIM — a move that spells the death knoll for its Pramerica brand.
The move underlines Prudential’s strategy of developing a pan-global business, expanding its asset classes and physical presence in regions where traditional Western labels like Pramerica have little resonance with customers. Prudential clearly has no intention of discarding the expansion strategy of former CEO Tidjane Thiam, a promising sign for future earnings — the bottom line is projected to advance 14% this year and 9% in 2016, resulting in decent P/E ratios of 13.8 times and 12.5 times.
Near-term dividend yields may not be as spellbinding, however, with a forecast reward of 38.9p per share yielding a handy-if-unspectacular 2.6%. And a predicted 43.5p dividend yields 2.8%. Still, predicted payment growth of 8% this year and 10% in 2015 is certainly worthy of attention, and I expect dividends to continue surging in the years ahead along with earnings.
National Grid
I believe that National Grid (LSE: NG) offers brilliant value for both growth and income seekers. Thanks to its vertically-integrated structure, the company does not face the same competitive problems hitting other utilities plays from Centrica and SSE to Thames Water. And while these firms’ profits outlooks are also being hampered by the threat of draconian regulatory action, National Grid is actually benefitting from recent legislative changes as RIIO price controls cut expenditure.
With National Grid also bulking it up its asset base in the UK and US by around 6% per annum, the City expects earnings to expand 4% in the year to March 2016, and an additional 1% rise is pencilled in for the following period. Consequently the network operator deals on reasonable P/E multiples of 15.7 times and 15.5 times for 2016 and 2017 correspondingly.
But it is in the dividend arena that National Grid really sets itself apart, the firm’s clear earnings visibility underpinning payout predictions of 43.7p per share for this year and 44.7p for 2017. Consequently National Grid sports gigantic yields of 4.6% and 4.7% for these years.
