3 Bargain Mega-Caps: BP plc, Imperial Tobacco PLC & Lloyds Banking Group PLC


With many investors believing that the FTSE 100 is rather high at present, it may feel as though it’s tough to find high-quality, good value companies with bright prospects at the moment. However, here are three companies that fit those categories and, as a result, could make a positive contribution to your portfolio moving forward.


2014 has been a rather disappointing year for investors in BP (LSE: BP), with the oil major seeing its share price fall by 0.5% since the turn of the year. However, much of this is due to concerns surrounding further sanctions with Russia that BP says could hurt its bottom line in future. The current share price, though, appears to adequately price this in, since BP trades on a price to earnings (P/E) ratio of just 10.2, which is significantly behind the FTSE 100’s P/E of 13.7. Furthermore, BP is starting to return to a degree of normality after the Deepwater Horizon oil spill and, with shares in the company currently yielding an impressive 4.8%, they could prove to be a winning investment at current levels.

Imperial Tobacco

Although its recent sales update showed that the Middle East and Russia continue to be a drag on performance, Imperial Tobacco (LSE: IMT) remains one of the most reliable income plays on the FTSE 100. It has increased dividends per share in each of the last four years and is forecast to do so next year, too, when shares could yield as much as 5.4%. Furthermore, the long-term prospects for Imperial Tobacco are bright, as the e-cigarette market could prove to be a major driver of profit growth for the company. With shares in Imperial Tobacco trading on a P/E of just 12.7, they appear to offer great value for money right now.


The banking sector has had a tough year, with Lloyds (LSE: LLOY) seeing market sentiment weaken at least partly as a result of negative news flow at its rivals. However, the company is due to be ‘back in the black’ this year, which is clearly positive news for shareholders. Furthermore, Lloyds is all set to grow earnings per share (EPS) by 8% next year, which is slightly ahead of the wider market. This should enable the bank to continue its progress towards paying out up to 65% of profit as a dividend by 2016. As a result, and trading on a P/E of just 10.1, Lloyds could see its share price head considerably higher over the next couple of years.

Of course, there are more bargain stocks in the FTSE 100. In fact, we've scoured the market and found what we believe are the 5 companies that could smash the FTSE 100's future performance.

The 5 companies are detailed in a simple and straightforward guide that you can put to use right away and which could make a positive contribution to your portfolio. Indeed, it could make 2014 and beyond even more prosperous years for your investments.

Click here to access your copy of the guide. It's completely free and comes without any further obligation.

Peter Stephens owns shares of BP, Imperial Tobacco and Lloyds Banking Group. 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.