With so many companies to choose from in the FTSE 100, sometimes it?s tough to keep track of what they?re all doing. Indeed, with share prices fluctuating and responding to news flow so quickly these days, it can be difficult to keep up to speed with a company?s strengths and weaknesses. With that in mind, I feel it?s worth focusing on three blue chips that, due to recent events, could be better investments than they at first may appear.
Over the last…
With so many companies to choose from in the FTSE 100, sometimes it’s tough to keep track of what they’re all doing. Indeed, with share prices fluctuating and responding to news flow so quickly these days, it can be difficult to keep up to speed with a company’s strengths and weaknesses. With that in mind, I feel it’s worth focusing on three blue chips that, due to recent events, could be better investments than they at first may appear.
Over the last month alone, SSE’s (LSE: SSE) share price has fallen by just under 6%. Certainly, this is disappointing, but what it means is that shares in the domestic electricity supplier now offer an even better yield than they have done in the recent past. Indeed, SSE now yields a whopping 6.1%, which is among the highest yields in the FTSE 100. In fact, it’s over two-thirds higher than the yield of the wider index. However, what may surprise you even more it that SSE has grown earnings per share (EPS) in every one of the last five years, making it a more reliable stock than you may have thought. As such, it could make for a top notch income play moving forward.
Despite sector peers such as AstraZeneca and Shire trading on price to earnings (P/E) ratios that are in the high teens/early twenties, you may be surprised to find out that GlaxoSmithKline (LSE: GSK) trades on a P/E of just 12.3. That’s even lower than the FTSE 100’s P/E of 13.2 and shows that GlaxoSmithKline offers great value for money at its present price. Of course, a low price can mean a high yield, and that’s certainly the case in GlaxoSmithKline’s case, with the pharmaceutical major offering a yield of 5.9%. Great value and a super yield are set to be aided by a well-diversified pipeline that could bolster the company’s bottom line over the medium term. As a result, GlaxoSmithKline could be a great long term investment.
Interest in the banks has cooled somewhat during 2014, after the market became excited with banking growth prospects during 2013. However, that means that banks such as HSBC (LSE: HSBA) now offer even better value for money, with it trading on a P/E of just 11.7, for instance. However, there’s much more to HSBC than a low price. It’s forecast to grow the bottom line by 7% in the current year and by 8% next year, both of which are highly impressive considering the fact that it remained profitable throughout the credit crunch and its profit is starting from a higher base than its faster-growing competitors. In addition, a yield of 4.9% may surprise you as well as the market, meaning that HSBC could see its share price move higher over the medium to long term.
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Peter Stephens owns shares of GlaxoSmithKline, HSBC Holdings, and SSE. The Motley Fool recommends GlaxoSmithKline.