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).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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


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.


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 considered so you should 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.

More on Investing Articles

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

With a spare £500 I’d buy these UK shares

A financial services giant, a FTSE 250 distributor, a FTSE 100 tech stock, and a gold miner are on the…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I buy this defensive FTSE 100 stock for growth and returns?

This Fool takes a closer look at a FTSE 100 stock to see if it could boost his holdings via…

Read more »

Young female analyst working at her desk in the office
Investing Articles

I robbed Mr Market of this cheap FTSE stock!

This FTSE 250 stock has crashed by almost 30% in six months. But I recently bought into this battered business…

Read more »

Mature people enjoying time together during road trip
Investing Articles

3 reasons I’m backing NIO shares to soar!

NIO shares have bounced up and down this year. But where will the share price go next? My bet is…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Up 300%, is the Hurricane Energy share price an opportunity too good to miss?

This Fool looks at why the Hurricane Energy share price has soared in the past 12 months. Should he buy…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

The BT share price crashes 20% in a month. Buy now?

The BT share price has crashed by almost a fifth since coming close to £2 on 12 July. After this…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

How I’d invest £1,000 in growth shares today to target £5,000 in a decade

Our writer reckons he could do well by choosing the right growth shares today and holding them in his portfolio…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

How passive income from stocks can speed up early retirement

By investing patiently over the years, buying quality shares has given me enough passive income to retire 10 or even…

Read more »