Believe it or not, Morrisons (LSE: MRW) is forecast to post FTSE 100-beating earnings growth numbers during the next two years. Clearly, this would be a major surprise to many investors, with the company having experienced a highly challenging period. However, with a new management team, considerable efficiencies to be made, and the potential for an upturn in the UK economic outlook, things are on the up for Morrisons.
For example, it is forecast to increase its bottom line by 8% in the current year, followed by 19% next year. And, while its price to earnings (P/E) ratio of 16.9 is higher than the FTSE 100’s rating of 16, Morrisons seems to be well-worth the premium, since it has a price to earnings growth (PEG) ratio of just 0.8.
While many investors have been spending their time focused on the idea of quad play (landline, pay-tv, mobile and broadband from one supplier) and developments in online advertising, ITV (LSE: ITV) provides evidence that free-to-air TV advertising is far from a dying market. In fact, it has grown its bottom line by 115% in the last four years, which is an astounding rate of growth given the fact that for part of that period the UK economy was experiencing very low levels of growth.
And, looking ahead, ITV is forecast to increase its earnings by 13% in the current year, and by 8% next year. This puts it on a PEG ratio of 1.3, which indicates that its shares still offer excellent value for money.
Improving consumer confidence is a major plus for Thomas Cook (LSE: TCG), which recently reported that it is having little difficulty selling holidays to UK consumers. And, while its non-UK divisions may hold it back somewhat, it is still forecast to post impressive earnings growth of 28% next year. This puts it on a PEG ratio of just 0.4, which shows that its share price looks set to continue to post strong gains even though it has already risen by 16% since the turn of the year.
Of course, uncertainty surrounding the UK’s economic future could cause cyclical stocks such as Thomas Cook to disappoint in the short run. But, with a wide margin of safety, it continues to offer an excellent long term investment opportunity.
For a technology company, Laird’s (LSE: LRD) yield is quite simply stunning. That’s because, compared to its peers, it offers a tremendous income proposition, with the company currently yielding 3.8%.
However, Laird is an even more appealing growth play than income stock. That’s because it is expected to grow its earnings by 15% in the current year, and by a further 12% next year. And, unlike a number of its highly rated sector peers, Laird trades on a P/E ratio of just 16.1, thereby showing that it offers income, growth and value potential.
With the UK house building sector currently experiencing a purple patch, it seems to be a great time to buy a slice of Galliford Try (LSE: GFRD). That’s further evidenced by the strong growth prospects on offer, with the company forecast to increase its bottom line by 16% in the current year, and by a further 17% next year. And, with it having a PEG ratio of only 0.7, its price seems to stack up, too, with it having a relatively wide margin of safety.
As with Laird, Galliford Try also offers a great income. It currently yields 4.3% from a payout ratio of 59%, which indicates that current dividends could move much higher over the medium term.
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Peter Stephens owns shares of Galliford Try, ITV, Laird, and Morrisons. 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.