3 Stocks With Stunning Growth Prospects: BT Group plc, Standard Chartered PLC And British American Tobacco plc

These 3 stocks could be star performers: BT Group plc (LON: BT.A), Standard Chartered PLC (LON: STAN) and British American Tobacco plc (LON: BATS)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

BT

With BT (LSE: BT-A) (NYSE: BT.US) offering broadband customers access to BT Sport for free, as well as the various other deals that it has had on its products in recent years, many investors are understandably wondering whether BT is going to be able to monetise these new customers. After all, BT exists to turn a profit, and the costs of its sports offering, for example, far outweigh the revenue it receives for it.

However, BT is slowly developing a significant amount of customer loyalty which, in the longer term, should allow it to increase prices, margins and profitability. So, it seems as though the market may be somewhat behind the curve when it comes to BT’s longer term growth potential.

In the meantime, BT has the potential to increase the income return of its shareholders. For example, it currently has a payout ratio of just 43%, which means that its current yield of 3.1% could become considerably higher over the medium term.

Standard Chartered

2013 was a disappointing year for Standard Chartered (LSE: STAN), with its bottom line falling by 17%. In fact, in prior years it had been the best performing of the UK-listed banks when it came to profitability, with its focus on Asia helping it to sail through the global financial crisis.

In recent months, though, that exposure has been to its cost, since China in particular has experienced a slowdown in its growth rate. However, for longer-term investors the region still holds huge potential, with it offering a far superior rate of growth to the US and Europe and the chance to access a vast market of new borrowers.

Despite such excellent prospects, Standard Chartered trades on a price to book (P/B) ratio of just 0.75, which indicates that it is extremely cheap at the present time. As such, it could be worth buying right now for its long term growth potential.

British American Tobacco

While cigarette producers such as British American Tobacco (LSE: BATS) continue to enjoy supremely high barriers to entry which protect their margins and profitability, a new threat has emerged in recent years that could have damaged that dominance somewhat.

That threat is e-cigarettes and, encouragingly, British American Tobacco took the threat extremely seriously and released its own e-cigarette brand called Vype. Although only small fry compared to its cigarette brands, Vype nevertheless has the potential to dominate a new and fast-growing market that seems to be popular among younger people.

In addition to having a sound strategy, British American Tobacco continues to offer its shareholders a fabulous return. For instance, return on equity has averaged over 50% per annum over the last three years, which shows that British American Tobacco remains a highly lucrative investment with huge potential.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of British American Tobacco. 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.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »