Why I’m Bullish On Vodafone Group plc, Taylor Wimpey plc & CRH PLC (UK)

These 3 stocks have huge growth potential: Vodafone Group plc (LON: VOD), Taylor Wimpey plc (LON: TW) and CRH PLC (UK) (LON: CRH)

| 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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In the last three months, the FTSE 100 has fallen by 6% and, while this is disappointing, a number of stocks have fallen by a greater amount. For example, housebuilder Taylor Wimpey (LSE: TW) is down by 14% since mid-August as fears surrounding the prospects for an interest rate rise have caused investor sentiment in the wider housebuilding sector to come under pressure.

However, today’s trading update from Taylor Wimpey shows that it remains a relatively appealing buy at the present time, with it reporting strong sales numbers in the traditionally slower summer months which have continued into the autumn period. For example, sales rates for the year to date are ahead of last year at 0.76 sales per outlet per week (up from 0.66 last year), with targeted completions for 2015 being fully sold.

Looking ahead, Taylor Wimpey believes that a backdrop of rising real incomes and the wide availability of mortgage products will equate to a resilient housing market even with rising interest rates set to feature. As such, it remains on-track to post an increase in net profit of 32% in the current year, followed by further growth in earnings of 15% next year. After its recent share price fall, Taylor Wimpey now trades on a price to earnings (P/E) ratio of just 11.9, which indicates that it is a hugely appealing long term buy.

Similarly, building materials company CRH (LSE: CRH) also offers an enticing risk/reward opportunity. Like Taylor Wimpey, its shares have fallen by more than the wider index in the last three months, with them being down by 8%. However, this puts them on a price to earnings growth (PEG) ratio of only 0.5. This indicates that the company’s shares offer growth at a very reasonable price.

In addition, CRH has the scope to become a very strong income play, with its payout ratio forecast to fall to just 41% next year. So, while it presently yields just 2.7%, shareholder payouts could rise at a rapid rate in future years and act as a positive catalyst on investor sentiment and, subsequently, on the company’s share price.

Meanwhile, Vodafone (LSE: VOD) has also declined by 8% in the last three months, although the outlook for the Europe-focused company is beginning to improve. That’s because the ECB’s quantitative easing programme is likely to have a positive impact on the single-currency region and has the potential to deliver improved consumer sentiment and demand over the coming years. This should benefit Vodafone because it has invested heavily in European assets such as Kabel Deutschland and Spain’s Ono, while also investing heavily in its network across the continent.

In addition, Vodafone is also reacting to the changing landscape of UK media, with the company now offering a broadband service in the UK as well as the scope for a pay-tv service. Both of these spaces offer cross-selling and growth opportunities which, alongside a yield of 5.3%, make Vodafone a very appealing investment at the present time.

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.

Peter Stephens owns shares of CRH, Taylor Wimpey, and Vodafone. The Motley Fool UK has no position in any of the shares mentioned. 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

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

A brilliantly reliable FTSE 100 share I plan to never sell!

This FTSE-quoted share has raised dividends for more than 30 years on the spin! Here's why I plan to hold…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

This 7.7% yielding FTSE 250 stock is up 24% in a year! Have I missed the boat?

When a stock surges, sometimes it can be too late to buy shares and capitalise. Is that the case with…

Read more »

Investing Articles

£13,200 invested in this defensive stock bags me £1K of passive income!

Building a passive income stream is possible and this Fool breaks down one investment in a single stock that could…

Read more »

Investing Articles

I think the Rolls-Royce dividend is coming back – but when?

The Rolls-Royce dividend disappeared in 2020 and has not come back. But with the company performance improving, might it reappear?

Read more »

British Pennies on a Pound Note
Investing Articles

Should I snap up this penny share in March?

Our writer is considering penny shares to buy for his portfolio next month. Does this mining company merit a place…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Stock market bubble – or start of a bull run?

Christopher Ruane considers whether the surging NVIDIA share price could be symptomatic of a wider stock market bubble forming.

Read more »

Investing Articles

Buying 8,254 Aviva shares in an empty ISA would give me a £1,370 income in year one

Harvey Jones is tempted to add Aviva shares to his Stocks and Shares ISA this year. Today’s 7.37% yield isn't…

Read more »

Investing Articles

Is the tide turning for bank shares?

Bank shares are trading on stubbornly cheap-looking valuations yet business performance in the sector is broadly robust. Should our writer…

Read more »