3 Stocks To Buy On St. Leger Day: HSBC Holdings plc, Centrica PLC And Diageo plc

Pound Coins

The investors who sold up in May and are only returning this week (for St. Leger Day) didn’t miss out on any notable gains during the summer months. They still find a FTSE 100 that has massively underperformed its US cousin, the S&P 500, which has made all-time high after all-time high. Meanwhile, our dear FTSE 100 is still unable to find the gear needed to push past 7,000 points.

With that in mind, here are three stocks that could help it to achieve that feat and, as such, could be worth buying on St. Leger Day.


Despite the FTSE 100 being flat since the start of May, HSBC (LSE: HSBA) has gained 8% at a time when investor sentiment has been weak for the wider banking sector. Of course, this should come as little surprise since HSBC was able, unlike its sector peers, to turn a profit throughout the credit crunch and so its shares do not always mirror the performance of the wider sector.

Despite their gain, shares in HSBC continue to offer good value for money at current price levels. For instance, they have a price to earnings (P/E) ratio of just 12.1 and come with above average growth prospects. Earnings per share (EPS) are expected to rise by 7% next year, with HSBC seeming to offer a potent mix of reliable, yet fast-growing profit. Allied to this is a yield of 4.7%, which makes HSBC seem like a great buy right now.


Unlike HSBC, shares in Centrica (LSE: CNA) have fallen by 2% since the start of May. However, with the Scottish referendum throwing a cloud of uncertainty over the FTSE 100 (for the next week or two at least), investor demand for defensive plays may increase, which would be good news for Centrica.

Looking further ahead, Centrica could look a lot different in a couple of years. A new management team is set to start in 2015 and the outcome of the General Election will have a major impact on the company’s profitability, with a Labour government currently set to freeze domestic electricity prices. While this is a risk investors need to be aware of, it appears as though it is adequately priced in, with shares in Centrica trading on a P/E of 12.1 and yielding 5.4%.


Like Centrica, Diageo (LSE: DGE) has seen its share price fall since May. However, in the case of the alcoholic drinks company, the fall is only marginal at 0.2%. Still, it means that shares continue to offer good value for money. They trade on a P/E of 18.1 which, when the FTSE 100 has a P/E of 13.8, may seem high. However, shares in Diageo have traded much higher and consumer goods peers such as Unilever have ratings that are considerably more generous than that of Diageo.

In addition, alcoholic beverages will be consumed whether the global economy performs well or not. As a result, Diageo should deliver reliable earnings growth moving forward whatever the economic weather.

As well as buying HSBC, Centrica and Diageo, how else could you beat the FTSE 100?

A good place to start is our free and without obligation guide called Where We Think The Smart Money Is Headed.

It's a simple, clear and actionable guide that could help you to find the most profitable and lucrative stocks and sectors. As a result, it may make 2014 and beyond an even more prosperous period for your investments.

Click here for your copy of the guide.

Peter Stephens owns shares of Centrica and HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.