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Why I Would Buy Banco Santander SA And Countrywide PLC But Sell Anglo American plc

Today I am looking at the investment case for three FTSE-listed stocks.

Banco Santander

I believe that Banco Santander (LSE: BNC) is an terrific pick for those seeking splendid long-term returns due to its extensive exposure to emerging markets, particularly those of Latin America. With British economic growth also clicking through the gears, and conditions in the eurozone also steadily improving, I believe that demand for the bank’s products is poised to stomp steadily higher.

City analysts expect these factors to underpin a solid 14% earnings uptick in 2015, a reading which produces an ultra-attractive P/E multiple of 12.8 times prospective earnings — a number below 15 times is widely considered very good value. And expectations of a further 13% improvement next year drive the ratio to an even better 11.4 times.

Santander put paid to its generous dividend policy back in January when it announced that the full-year dividend for 2015 would not exceed 20 euro cents per share, a huge departure from the payment of around 60 cents delivered in recent years. However, such a dividend still creates a handy-if-unspectacular yield of 2.9%. And with the dividend cutback having shored up the bank’s capital position, and earnings anticipated to surge in coming years, I expect payouts from Santander to step higher again.

Countrywide

Property surveyors Countrywide (LSE: CWD) has been one of the best-performing stocks in Friday business and was recently trading 5.9% higher. Solid investor appetite for the firm comes as no surprise to me given that a combination of supportive lending conditions and government house-buying initiatives are helping to support home sales — indeed, mortgage approvals hit a six-month high in February, at 61,760, the Bank of England recently announced.

The number crunchers expect Countrywide to keep on delivering strong earnings growth in the coming years, and have pencilled in expansion to the tune of 10% and 13% in 2015 and 2016 correspondingly. These figures create attractive P/E ratios of 12.7 times for this year and 11.4 times for 2015, while PEG readouts of 1.2 and 0.9 for these years underline the firm’s exceptional value — any reading around or below 1 is widely considered a steal.

These solid growth prospects are also expected to keep the dividend rattling along nicely, too. The surveyors are anticipated to lift the full-year payout from 15p per share in 2014 to 26.3p this year, and again to 27.7p in 2016. Subsequently Countrywide carries bumper yields of 5% and 5.3% for 2015 and 2016 respectively.

Anglo American

Unlike the two stocks I have mentioned, I believe that investors should beware of investing in diversified mining play Anglo American (LSE: AAL). The business swung to a pre-tax loss of £250m in 2014 from a profit of $1.7bn in the previous 12 months, and I expect further sustained weakness in key commodity sectors to keep the bottom line under pressure.

Indeed, enduring fears of chronic oversupply in the iron ore market drove prices further below the $50 per tonne marker this week to $48, prompted by news that China is set to provide financial support to domestic producers. As well, coal prices — another critical area for Anglo American — are also on the slide as output from Australia, China and the US climbs steadily higher.

As a result Anglo American is expected to record a fourth successive earnings dip in 2015, and a 27% collapse is currently slated. This figure results in a P/E multiple of 11.4 times which, although not excessively high, can still be considered unattractive in my opinion given that worsening supply/demand balances in the digger’s key markets look set to get a lot worse before they get better.

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Royston Wild has no position in any shares mentioned. 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.