BT
With BT (LSE: BT-A) (NYSE: BT.US) being in the midst of takeover talks to acquire mobile network EE, the present time appears to be a rather uncertain one for the company and its shareholders. After all, a rights issue of up to £2 billion is being mooted should the talks progress and, although it could provide BT with a true ‘quad play’ offering (landline, pay-tv, mobile and broadband), it could take time for the acquisition to be integrated into the company.
That’s not to say, though, that BT won’t see its share price rise next year. With the company being forecast to post earnings growth in the mid-single digits, which is in line with the forecast growth rate of the wider market, its valuation could move upwards. And, with BT trading on a price to earnings (P/E) ratio of 13.7 (versus 14.9 for the FTSE 100) there is scope for it to move higher.
However, with such considerable changes taking place, it’s difficult to envisage BT trading at a vast premium to the wider index in 2015, which means that although it could be worth buying right now, BT may not deliver a gain quite as high as 33% next year.
Santander
Having passed the Bank of England’s stress test recently, investors in Santander (LSE: BNC) (NYSE: SAN.US) should be feeling rather optimistic regarding the bank’s future potential. After all, it is forecast to deliver stunning growth over the next couple of years, with its earnings expected to rise by 24% this year, followed by a further 19% next year.
This is a stunning rate of growth and, if met, could mean that Santander sees demand for its shares rise in 2015. And, with it currently yielding a whopping 7.1% next year, market sentiment could pick up strongly from income and growth investors alike, thereby pushing Santander’s share price much higher.
In fact, the combination of such excellent earnings growth potential, a top notch yield and a P/E ratio of just 14, could mean that Santander has a superb 2015 and sees its share price rise by more than 33%.
Persimmon
While there is a degree of uncertainty in the UK housing market at present, with house prices levelling off in recent months, the future looks very bright for housebuilders such as Persimmon (LSE: PSN). That’s because the UK seems to have a chronic shortage of houses, with all major political parties agreeing that this is the case.
So, it’s little wonder that Persimmon is enjoying something of a purple patch at the present time, with its bottom line forecast to grow by 43% this year and by a further 22% next year. Despite this, Persimmon trades on a P/E ratio of just 13.1, and so a combination of strong earnings growth and an upward adjustment to its rating could mean that Persimmon’s share price rises by more than a third next year. As a result, it appears to be a top buy for 2015.
