With the FTSE 100 firming up, you could be forgiven for thinking that it’s something of a coincidence that St Leger Day is just around the corner. Indeed, after making next to no gains during the summer months, the FTSE 100 has gained 1% since the start of September.
Despite this, it’s most certainly not too late to buy shares in a number of companies (more on that later) and, to kick things off, here are three companies that have great SPs and could be worth buying in anticipation of St. Leger Day.
Rio Tinto
Rio Tinto (LSE: RIO) is perhaps one of the most surprising stocks in the FTSE 100. That’s because, despite being viewed as a pure growth play, the company also offers a highly attractive yield right now. For instance, shares in Rio Tinto currently yield 3.9% and have the potential to become even more attractive as an income play due to their relatively low payout ratio.
Furthermore, Rio Tinto is forecast to increase earnings by 7% next year, which is at the upper end of expectations for the wider market. Despite this, shares in the company trade on a price to earnings (P/E) ratio of just 10.3, which highlights their strong value as well as growth and income potential.
BT
BT (LSE: BT-A) is perhaps best described as a ‘good all-rounder’. It offers impressive earnings growth potential, with the company’s bottom line forecast to increase by 4% this year and by 7% next year. It has a decent yield of 3.2% and trades at a valuation that seems very reasonable, with shares in BT having a P/E ratio of 13.3, for example.
However, there’s more to BT’s long-term future than simply ‘in-line performance’. Its battle with Sky for sports rights has the potential to transform the company’s top and bottom lines and to fundamentally change investor sentiment toward the business. While many investors may balk at the vast sums required to enter this market (for example, £900 million for Champions League football rights), some short term pain could deliver significant long term gain.
Tesco
You may be surprised to see that Tesco (LSE: TSCO) features on this list. However, now could prove to be a great time to buy a slice of the business. As all investors know, no company’s share price is ever trading at low levels without good reason, so the idea of buying low and selling high inevitably comes with risk.
However, in Tesco’s case, the potential reward seems to outweigh the risk. Certainly, profits are likely to disappoint for a good while yet, but even a mildly improved performance could be the catalyst to push shares higher. While Tesco perhaps deserves to trade at a discount to the wider market, the current P/E ratio of 9.6 seems simply too low.
