4 Stocks For Growth-Hungry Investors: Supergroup PLC, Associated British Foods plc, BAE Systems plc And Unilever plc

Royston Wild explains the merits of investing in Supergroup PLC (LON: SGP), Associated British Foods plc (LON: ABF), BAE Systems plc (LON: BA) and Unilever plc (LON: ULVR).

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Today I am looking at four London firms poised to deliver outstanding earnings expansion.

Supergroup

I am convinced that fashion powerhouse Supergroup (LSE: SGP) should boast splendid bottom-line growth in the coming years as its international expansion rolls on. The Superdry manufacturer announced last week that retail revenues leapt 17% in the year to March 2015, helped in no small part by double-digit growth in its European store space.

As well as expanding further on the continent, Supergroup also announced plans to enter China through a joint venture with Trendy International Group, and follows the acquisition of distribution rights in North America and Mexico in March.

With shoppers across the globe flocking to snap up the retailer’s garbs, the City expects earnings to rise 12% and 15% in 2016 and 2017 respectively, driving the P/E ratio from 19.7 times to just 16.7 times next year. This is just outside the benchmark of 15 times that indicates stellar value.

Associated British Foods

Food and fashion play Associated British Foods (LSE: ABF) cheered the market last week when it advised group revenues edged 2% higher during the 40 weeks to June 20, with its Sugar and Retail divisions both performing extremely strongly. But it is the latter area which promises to light a fire under the bottom line as galloping demand for its Primark labels takes off in the UK and abroad.

Indeed, ABF announced plans to roll out three stores in Italy from next year, adding to its already solid presence in several other European markets including Germany and France. As well, the firm said that the first of its US stores will be opened in Boston during the autumn.

Although operating at the other end of the scale of the fashion scale to Supergroup, consumers the world over love a good bargain, and I expect earnings at ABF to surge skywards following an anticipated 6% dip this year and 7% rebound in 2016. Consequently I anticipate P/E ratios of 29.5 times for this year and 28.1 times for next year to keep on toppling.

BAE Systems

Shares in top-tier weapons builder BAE Systems (LSE: BA) received a fillip last week following news that George Osborne would spend at least 2% of British GDP on defence through to 2020. It is hoped that such measures will encourage other Nato members to open their chequebooks, particularly as fears over Russian intervention in Eastern Europe and the threat of ISIS rumble on.

Improving economic conditions in the US have provided a major boost to the defence sector during the past year or so, while BAE Systems specifically is also enjoying resplendent product demand from emerging regions — indeed, the firm’s hefty presence in Saudi Arabia was underlined last week after it agreed to establish a new repair and maintenance hub in the country with Al-Salam Aircraft.

The City expects BAE Systems to punch a modest 1% earnings rise in 2015, although this is anticipated to accelerate to 6% in the following year as previous sales pressures continue to peter out. And with these figures producing ultra-low P/E multiples of 11.6 times and 11 times for these years I reckon the engineering giant is a steal.

Unilever

I stocked up with shares in household goods specialist Unilever (LSE: ULVR) on account of its sprawling presence in developing markets. The company — which derives almost six-tenths of total revenues from emerging regions — is enjoying the fruits of improving consumer spending in these areas, and saw sales rise 5.4% in January-March, improving from 4.1% in the final quarter of 2014.

The formidable strength of the firm’s broad product portfolio is helping to push sales higher comfortably higher, from Domestos bleach and Dove soap through to Walls ice cream. So even in times of economic pressure, Unilever is able to keep revenues ticking higher through strategic price rises. And the London company’s great track record of product innovation has kept shoppers hooked.

In light of these factors the number crunchers expect Unilever to enjoy earnings growth of 15% in 2015, followed by an extra 7% rise next year. These figures create slightly-elevated P/E ratios of 20.6 times and 19.2 times correspondingly, but I believe the prospect of further explosive growth in the years ahead make the business a compelling buy.

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 owns shares of Unilever. The Motley Fool UK owns shares of Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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