Today I’ll be taking a closer look at three companies from the FTSE 100 with plenty of scope for share price growth. Could now be a good time to grab a slice of the action before the shares soar?
Profits up sixfold
International building materials supplier CRH (LSE: CRH) reported a strong set of figures last week when it updated the market with interim results for the six months to June. The company revealed a massive jump in pre-tax profits to €407m, compared to just €63m for the same period a year earlier, with revenues 35% higher at €12.7bn. The encouraging figures reflect continued positive momentum in the Americas and the inclusion of acquisitions made in the latter half of 2015.
Shares in the Irish firm have continued to surge this year, with near 40% gains in the last six months alone, and investors will be wondering whether it’s time to take profits. But I think there’s more to come from the Dublin-based business, as analysts are expecting full-year earnings to be 72% higher than last year, with a further 18% improvement pencilled-in for next year, leaving the shares trading at a reasonable 17 times forecast earnings for 2017.
Plenty more to come
It’s been yet another good year for stakeholders in equipment rental firm Ashtead Group (LSE: AHT), with the shares soaring from February lows of £7.69 to recent levels approaching £13. The firm has a proven track record of growth in both revenue and earnings stretching back to the start of the decade when the shares were changing hands for less than £1. Will someone hurry up and invent me a time machine, please!
Although based in the UK, Ashtead generates most of its revenues in the US through its subsidiary Sunbelt Rentals, and yet the firm only has a 7% market share. With the company targeting a 15% share of the US market through organic growth, as well as bolt-on acquisitions, there’s certainly plenty of room for further improvement. I believe Ashtead is still a bargain trading at 13 times forecast earnings for the current year to April, falling to just 12 times for fiscal 2018.
No Brexit impact
Global engineering group GKN (LSE: GKN) has said that despite uncertainty following the EU referendum, the medium-term impact on the business should be minimal. The market certainly agrees as the shares were relatively unscathed following the Brexit vote, and are now trading well above pre-referendum levels. Management is expecting 2016 to be another year of growth, helped by favourable currency translation and the contribution from Fokker, which it acquired a year ago.
Sadly, City analysts don’t share management optimism regarding current year prospects, with consensus estimates suggesting flat earnings growth this year. But they do expect a solid 11% improvement in underlying profits next year. GKN looks undervalued at just 11 times forecast earnings for 2017, offering plenty of scope for an upward rerating.
