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3 Great Growth Stocks For Savvy Investors: GlaxoSmithKline plc, Legal & General Group Plc And Sports Direct International Plc

Today I am looking at three London-listed companies set to deliver excellent earnings growth.

GlaxoSmithKline

Considering that GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) has been steadily battered by a stream of patent expirations across key products, at first glance the pharma play not be an obvious pick for those seeking reliable earnings growth. Indeed, the prospect of further exclusivity losses are expected to produce yet another annual earnings loss this year, with a 4% dip currently mooted.

Still, I believe that the sales picture is definitely on the up for the Brentford-based firm. Of course the business of drugs testing can often be frustrating and expensive should products fail to make the grade or become subject to severe launch delays.

However, in GlaxoSmithKline’s case the company is chucking vast sums at its pipeline to develop the next generation of revenues drivers and mitigate these problems, achieved through a combination of organic investment, industry synergies like that with Swiss giant Novartis, and a steady conveyor belt of acquisitions.

Consequently GlaxoSmithKline is expected to get back on the right track from next year onwards, and a 4% earnings bounceback is currently projected for 2016. Although the company trades on P/E multiples of 18.2 times and 17.2 times projected earnings for 2015 and 2016 correspondingly — outside the watermark of 15 times or below which signals attractive value — I reckon that the fruits of GlaxoSmithKline’s robust pipeline, not to mention fruits of galloping global drug demand, should drive sales through the roof in coming years and therefore merits this premium.

Legal & General Group

Life insurance leviathan Legal & General (LSE: LGEN) has been a reliable generator of reliable, double-digit earnings growth in the post-recession landscape. And boosted by a renewed focus towards developing regions, not to mention a product portfolio, I believe that this strong momentum is set to reign during the medium term at least.

This view is shared by the City, and Legal & General is expected to generate further growth in the region of 13% for the current 12-month period. And further 9% rise is anticipated for 2016.

These numbers leave the insurer changing hands on a P/E ratio of 15.2 times for 2015, but which slips to just 14 times for next year. With Legal & General’s ability to throw up boatloads of cash also reinforcing its aggressive acquisition drive — indeed, the firm finalised the purchase of New Life Home Finance for £5m earlier this month — I expect new business levels to ignite looking ahead.

Sports Direct International

Like Legal & General, sportswear outlet Sports Direct (LSE: SPD) has a proud record of creating exceptional year-on-year earnings growth for some time now — indeed, the business has seen the bottom line swell at a compound annual growth rate of 26.9% during the past five years alone. With Britain’s fitness craze showing no signs of slowing, I fully expect the trainer and tracksuit specialists to keep enjoying excellent growth.

The abacus bashers agree with my bullish take, and predict that Sports Direct will see earnings advance 16% for the year closing April 2015. And further improvements of 17% and 13% are pencilled in for fiscal 2016 and 2017 correspondingly.

As a result the business deals on P/E multiples of just 15 times for this year and 13.7 times prospective earnings for 2017. With Mike Ashley’s outfit also expanding aggressively in European marketplaces, I expect sales of its cut-price sportswear to continue heading for the stars.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline and Sports Direct International. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.