3 Great Growth Picks For 2016: Go-Ahead Group plc, Michael Page International plc, Crest Nicholson Holdings PLC?

Are Go-Ahead Group plc (LON: GOG), Michael Page International plc (LON: MPI) and Crest Nicholson Holdings PLC (LON: CRST) set to storm ahead?

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

So the FTSE 100 has had a rocky start to 2016. And people are deserting shares due to fears of China, banks, recession, or whatever… Is that a good time to be looking for growth shares? Most definitely.

Growth in travel

Shares in Go-Ahead Group (LSE: GOG) have actually fallen by 17% since their December peak, but interim results released Thursday gave them a 6% boost back up to 2,380p. Go-Ahead operates bus and commuter train services, and provides ground handling services for the aviation industry too, which might perhaps not sound all that glamorous.

But a 25% rise in EPS forecast for the year to June 2016 puts the shares on a lowly PEG ratio of 0.5 — the PEG compares the firm’s P/E (currently 12.2 for Go-Ahead) with its earnings growth, and anything under 0.7 tends to get growth investors salivating.

The first-half figures suggested everything is on track, with the firm’s full-year expectations unchanged. Adjusted earnings per share rose by 25%, bang on the full-year forecast target, and the interim dividend was lifted by 6.5% to 28.33p per share, nicely ahead of inflation.

Recruitment strength

Michael Page International (LSE: MPI) has seen its shares lose 24% in the past 12 months after a depressing fall since the turn of the year to 377p. That’s despite the global recruitment specialist having put in two years of healthy EPS growth, and despite a Q4 update telling us of a 9.2% rise in gross profit to a record £555.9m. Fourth quarter conditions did apparently deteriorate a little, and the fear might now be that EPS growth could come in below the tipsters’ forecast of 11% — results are due on 10 March.

But the 23% EPS growth currently forecast for 2016 keeps the P/E down to a modest 15 and gives the shares a PEG of 0.7. There’s a 3.2% dividend yield predicted too, which is around the FTSE average and better than a bank savings account. So could we be looking at a great growth opportunity with a decent dividend thrown in for good measure? The City seems to think so, offering a healthy buy consensus.

Bricks and mortar

My third growth candidate is FTSE 250 housebuilder Crest Nicholson (LSE: CRST), whose shares are up 27% in the past 12 months to 572p, and by 110% in five years.

For the year ended October 2015, Crest Nicholson reported an 8% rise in completed homes, and a 32% boost in pre-tax profit to £154m from revenue of £805m, and lifted its dividend by 38%. The whole sector has been enjoying a very rosy spell of late with massive profits for those who invested in the downturn, and the thing is there’s no sign of it stopping.

With a strong forward sales book, Crest reckons it’s on target for £1bn in revenue in 2016, and is aiming for £1.4bn by 2019. Analysts are forecasting a further 20% rise in EPS this year, and that puts Crest Nicholson shares on a very low P/E of 9.5 and a PEG of just 0.5. Oh, and there’s a 4.9% dividend predicted too.

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.

Alan Oscroft has no position in any shares mentioned. 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

Investing Articles

Would Warren Buffett buy BP shares, as oil excitement grows?

Warren Buffett is a big investor in the oil business, and BP's performance has been attracting investor attention in results…

Read more »

Cropped shot of an affectionate young couple posing with a bunch of flowers in their kitchen on their anniversary
Investing Articles

Here’s how long-term loyalty to UK shares can lead to dazzling returns!

The most successful UK and US share investors buy shares to hold for the long term, as this report shows.

Read more »

Investing Articles

NatWest has just smashed brokers’ dividend forecasts!

After NatWest delivered a Valentine’s Day surprise to investors, our writer thinks the experts may have to raise their dividend…

Read more »

Investing Articles

The NatWest share price slips in early trading despite positive FY 2024 results. What’s the deal?

The NatWest share price is down slightly this morning after the bank released its final results for 2024. Our writer…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

My Legal & General shares have climbed just 7% — so how come I’m sitting on a 20% gain?

Harvey Jones' trading account is showing only a modest return on his Legal & General Shares, but on drilling down…

Read more »

Investing Articles

Prediction: the BP share price could rise in 2025 (or it might fall!)

Following this week’s release of the energy giant’s 2024 results, our writer reviews the prospects for the BP (LSE:BP.) share…

Read more »

many happy international football fans watching tv
Investing Articles

What’s gone wrong with the FTSE 100’s ‘King of Trainers’?

Feeling the pain of a 28% drop in the JD Sports share price over the past three months, our writer…

Read more »

Investing Articles

Is it too late for investors to consider buying these outstanding FTSE 100 shares?

Stephen Wright wonders whether now's the time to consider buying shares in the FTSE 100’s outstanding companies, despite some high…

Read more »