3 Neil Woodford Fast Earnings-Growers: HSBC Holdings plc, NEXT plc and Provident Financial plc

WOODFORDRenowned fund manager Neil Woodford has been thrashing the market for a quarter of a century. Woodford is a very selective stockpicker. Fewer than 1 in 10 of the UK’s top 350 companies earn a place in his funds.

Hence, I always keep an eye on his holdings for promising investment ideas.

HSBC Holdings (LSE: HSBA) (NYSE: HSBC.US), NEXT (LSE: NXT) and Provident Financial (LSE: PFG) are three Woodford picks that all delivered double-digits earnings growth last year and are set to post further strong rises in the years ahead.


Retailer NEXT continued its long record of strong annual earnings growth with a 23% increase in EPS last year.

In a recent interim trading update, the company said it expects EPS growth of 12-18% for the current year — an upping of its previous guidance of 8-14%. Growth at the 15% mid-point of the new range gives a forward P/E of 16.4 at a recent share price of 6,895p.

NEXT is a recent investment for Woodford. He believes the company has “a very successful growth strategy” and deserves its higher rating.

Provident Financial

Provident Financial has been supplying credit to the sub-prime market since 1880. The group still does traditional doorstep lending, but also offers other services, including Visa-branded credit cards and online loans.

Woodford has been an investor in Provident Financial for many years, and has been rewarded with regular double-digit annual EPS growth, including an increase of 12% last year.

Analysts are forecasting growth of 14% for both this year and next; and that may be conservative, because this year’s first-half EPS was ahead by 25%. At a recent share price of 2,064p, 14% earnings growth would imply a P/E of 16.


Few companies from the real super-heavyweight echelon of the FTSE 100 were able to beat the 14% increase in earnings per share (EPS) reported by HSBC last year.

Analysts reckon a 7% decline in this year’s first-half earnings is a blip. The consensus is for a big swing back in the second half, with full-year EPS coming in 7-8% ahead of last year; followed by similar growth in 2015. At a recent share price of 643p, HSBC trades on a forward P/E of just 12.

HSBC is the biggest and most geographically diversified of the Footsie’s five banks, and the only one that Woodford currently rates as investible.

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G A Chester has no position in any shares mentioned. The Motley Fool 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.