Today I am looking at three stocks I believe would look great in any stocks portfolio.
JD Wetherspoon
Booze behemoth Wetherspoons (LSE: JDW) worried the market in midweek business and was recently dealing 7.1% lower from Tuesday’s close. In its latest trading statement the Watford firm advised that “the recent government announcement regarding the ‘living wage’ adds considerable uncertainty to future financial projections in the pub industry”, adding to the considerable pressure on margins as the sector battles competition from supermarkets.
While investors should of course be taking Wetherspoons’ warning extremely seriously, I believe that the business still offers brilliant potential. The company is investing huge amounts into expanding its pub portfolio while also shuttering many of its underperforming outlets, a programme that helped propel total sales 6.5% higher during May-July. And Wetherspoons plans to open another 20-30 pubs next year, driving the number of its pubs to within a whisker of the magic 1,000 marker.
Accordingly the City expects earnings growth of 1% for the year concluding July 2015 to accelerate to 12% the following year, driving a P/E multiple of 15.6 times for the current period to just 14 times — any reading around or below 15 times is widely considered sterling value. And predicted dividends of 12.1p and 12.5p per share for 2015 and 2016 correspondingly create decent-if-hardly-barnstorming yields of 1.6% and 1.7% correspondingly.
E2V Technologies
Unlike Wetherspoons, semiconductor and imaging tech builder E2V Technologies (LSE: E2V) lit up the market in Wednesday’s session and was last dealing 1.3% higher on the day. The business advised in its latest update that despite witnessing ‘modest revenue growth‘ during April-June, caused by order weakness at its semiconductor arm, its full-year guidance remains unchanged.
Indeed, the Essex firm has previously laid out its intention to double EBIT by 2020, a goal that is likely to be underpinned by resplendent growth at its Space division. With ongoing restructuring at the firm also bolstering the bottom line, the City is in broad agreement that earnings are on an upward trajectory, and have pencilled in rises to the tune of 4% and 8% for the years ending March 2016 and 2017 respectively. As a result E2V Technologies boasts attractive P/E ratios of 16.1 times for this year and 15 times for 2017.
And these bubbly growth projections, allied with the impact of current restructuring on the company’s cash reserves, is expected to keep driving the dividend skywards, too. A projected payout of 5.1p per share last year is anticipated to advance to 5.4p in 2016, creating a yield of 2.3%, and to 5.8p in 2017, pushing the readout to 2.5%.
Lloyds Banking Group
Banking giant Lloyds (LSE: LLOY) (NYSE: LYG.US) has naturally enjoyed a share price bump after the Greek debt deal inked earlier this week, although advances have since pared back a bit and the firm was recently 0.1% higher on Wednesday. And I believe the stock is in great shape to continue rising as a buoyant British economy boosts demand from retail customers and business alike in the coming years.
Growth isn’t expected to take off at Lloyds in the near-term by any means — indeed, the City has pencilled in advances to the tune of just 1% and 2% in 2015 and 2016 respectively. However, it is hard to look past the terrific value these projections provide, with a P/E ratio of 10 times through to end-2016 smack on the barometer that represents excellent bang for one’s buck.
And this steadily-improving earnings picture, combined with the effects of massive restructuring on the balance sheet, is anticipated to drive dividends firmly higher in the years ahead. With Lloyds having got its payout policy back on track last year, the number crunchers now expect the banking giant to shell out rewards of 2.8p per share this year and 4.2p in 2016. Consequently a chunky 3.3% yield for 2015 leaps to a market-mashing 4.9% for next year.
