Today I am looking at three big-cap beauties set to enjoy splendid bottom-line growth.
Apple
Smartphone and tablet PC giant Apple (NASDAQ: AAPL.US) has a stunning record of annual earnings growth. This does not come as a surprise given the firm’s pedigree of product innovation, a quality which has made its iPhone and iPad brands the standard to which all other tech manufacturers strive to match.
Indeed, Apple’s position as the go-to brand for tech connoisseurs is expected to keep sales striding higher in the coming years, a trend which City analysts expect to underpin earnings growth of 34% and 8% in the years concluding September 2015 and 2016 correspondingly.
As a result the business currently trades on what I consider ultra-cheap P/E ratios of 14.3 times prospective earnings for this year, and 13.3 times for fiscal 2016. Any reading below 15 times is generally regarded as attractive value.
With Apple’s iPhone 6 launch last autumn underlining the terrific desirability of its products — the firm sold an astonishing 74.5 million phones in October-December alone — and the business about to embark on the potentially-explosive smartwatch market , I believe Apple should continue to deliver strong bottom-line expansion for many years yet.
Persimmon
I am convinced that the housing crisis enveloping Britain should continue to blast earnings at housebuilders like Persimmon (LSE: PSN) higher. The country’s banks and building societies are making it increasingly easier for buyers to borrow through a combination of product rate cuts and charge reductions, while the government continues to give voters a helping hand to get on the housing ladder — Chancellor Osborne’s ‘Help To Buy’ ISA launched as part of this month’s Budget is further evidence of this.
Given these supportive factors, Persimmon is — like Apple — expected to keep its exceptional record of year-on-year earnings growth rolling. Indeed, the number crunchers expect the construction play to punch expansion of 17% in 2015, and a further chunky 13% advance is chalked in for 2016.
And these projections make Persimmon irresistible value for money, in my opinion. A mega–low P/E multiple of 11.4 times for this year falls to just 10 times for 2016, bang on the watermark which indicates irresistible bang for your buck. And a PEG readout of 0.7 times through to the close of next year, some way below the value standard of 1, underlines Persimmon’s great value.
International Consolidated Airlines Group
I believe that a backcloth of rising traveller numbers and brand strength should keep profits flying higher at International Consolidated Airlines (LSE: IAG). As well as boosting ticket sales for its British Airways and Iberia brands, I believe that the firm is also well positioned to benefit from the growing popularity of budget airlines such as its Vueling chain, an area which the firm is hoping to capitalise on through the purchase of Aer Lingus.
Having surged comfortably back into the black in recent years, International Consolidated Airlines is expected to keep this breakneck momentum rolling in the medium term at least — City analysts have marked in further earnings growth of 71% in 2015 and 22% in 2016.
Such numbers leave the airline group changing hands on earnings multiples of just 11.5 times and 9.4 times for 2015 and 2016 correspondingly. Considering that passenger numbers look set to continue surging across both its pan-European and transatlantic operations; fuel costs look set to remain subdued; and restructuring efforts still have much left in the tank, I believe International Consolidated Airlines is an excellent selection for growth seekers.
