Unilever plc, Cineworld Group plc & Imperial Tobacco Group PLC: Perfect Stocks For Volatile Times

Royston Wild explains why Unilever plc (LON: ULVR), Cineworld Group plc (LON: CINE) and Imperial Tobacco Group PLC (LON: IMT) are solid picks for solid earnings expansion.

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Today I am looking at three London stocks that should keep on delivering dependable earnings growth.

Manufacture magnificent returns

Thanks to the unrivalled pricing power of its broad product portfolio, I reckon household goods manufacturer Unilever (LSE: ULVR) is a terrific selection for those seeking robust bottom-line growth in the years ahead.

While it is obvious that wider economic travails can have a detrimental impact on consumer spending habits, Unilever — through a range of products from Axe deodorant to Hellmann’s mayonnaise — is immune from the worst of these pressures thanks to the brilliant brand loyalty enjoyed by its labels.

So although economic conditions in emerging markets have become more challenging over the past year, Unilever has still been able to print strong revenues growth. Indeed, sales from such markets rose 8.1% between October and December, broadly stable from the previous quarter and up from 4.1% in the same 2014 period.

With Unilever also doubling down on its cost-saving programmes, the City expects earnings to rise an additional 6% in 2016, resulting in a P/E rating of 20.1 times. I reckon this represents great value given the enduring popularity of Unilever’s labels across the globe.

A matinee idol

Regardless of the broader state of the British economy, one thing is for sure: Britain’s appetite for ‘catching a flick’ is stronger than ever. A trip to the cinema is a relatively-inexpensive way of getting your kicks, making the likes of Cineworld (LSE: CINE) a strong contender for reliable bottom-line expansion.

Data from industry researcher Rentrak showed total UK box office takings hit a colossal £1.31bn during 2015, up 15% from the prior year and representing the highest-grossing year ever. The result was driven by hits like Spectre and Star Wars: The Force Awakens, and I believe the release of blockbusters like Batman v Superman, Independence Day 2 and the next Bourne instalment in 2016 alone should keep ticket sales rising.

And the potential for further expansion in Europe could provide Cineworld’s long-term earnings outlook with additional fuel. In the meantime the number crunchers expect the chain to produce a further 9% earnings bounce in 2016, resulting in a decent P/E multiple of 18 times.

A smoking growth bet

The tobacco sector has long been a ‘go-to’ segment for those seeking dependable profits expansion, and industry giant Imperial Tobacco (LSE: IMT) is a particular favourite for growth-hungry investors.

Like Unilever, Imperial Tobacco can count on a wide array of market-leading labels such as Gauloises and West to keep revenues moving steadily higher. And thanks to expansion in the North American marketplace, not to mention the firm’s rising presence in hot growth areas like caffeine strips and e-cigarettes, Imperial Tobacco can look forward to further strong sales growth in my opinion.

And with the business also doubling down on investment in its industry-leading labels, the City expects Imperial Tobacco to enjoy a 10% earnings surge in the 12 months to June 2016. I believe a consequent P/E rating of just 15.1 times is a steal given the company’s sterling growth outlook.

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 has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended 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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