ARM
On the face of it, ARM (LSE: ARM) (NASDAQ: ARMH.US) may not appear to be such an attractive growth stock. After all, in the last two years it has posted a fall in earnings of 1% and a rise of 25% respectively. This growth rate indicates that, while ARM remains a high-quality technology company with a highly appealing business model, its super-fast growth days may well be behind it. And, with a price to earnings (P/E) ratio of 35.5, it seems to lack value as well as strong growth appeal.
However, looking ahead, things are about to change for ARM, with the company forecast to post a rise of 75% in its bottom line in the current year. As such, investor sentiment has improved significantly this year, with ARM’s shares being up 13% since 1 January. And, with ARM set to enjoy further growth over the long run from the increased development and sales of products within the so-called internet of things, it appears to have a very bright future, with its price to earnings growth (PEG) ratio of 0.5 indicating that further share price rises could lie ahead.
easyJet
Despite making its first half-year profit since 2002, shares in easyJet (LSE: EZJ) are down by 8% today. That’s because the market is concerned about comments made by the company regarding the third quarter of the year, which easyJet expects to be tougher than it had previously anticipated.
In fact, easyJet now expects third quarter revenue per seat to fall by around 4% and this is likely to cause its profit for the full year to be behind previous guidance. The key reason for the fall is disruption from the air traffic control strikes in France in April, while tougher than expected trading conditions have also pegged-back easyJet’s growth in recent weeks.
Still, easyJet is expected to increase its bottom line by 20% in the current year and by a further 12% next year. And, with its shares trading on a PEG ratio of just 0.7, they offer a wide margin of safety which means that they appear to offer excellent value for money, even if there are further downgrades to its forecasts.
Standard Life
It is rare to find a company with stunning growth prospects trading at a great price. It is even rarer to find one that also offers a better yield than the wider index. However, Standard Life (LSE: SL) does just that, with the insurance company currently forecast to increase its bottom line by a whopping 71% this year and by a further 19% next year. That’s much more impressive than the FTSE 100’s growth rate and, despite this, Standard Life has a PEG ratio of just 0.2, which indicates that its shares could be due for an upward re-rating.
And, with Standard Life having a yield of 4.4% from a dividend that is covered 1.3 times by profit, it seems to be well-worth buying at the present time.
