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Why I Would Buy Barclays Plc And Spire Healthcare Group PLC But Sell Tullow Oil plc

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

Barclays

After many years of volatility following the global banking crisis of 2008/2009, I believe that Barclays’ (LSE: BARC) (NYSE: BCS.US) aggressive restructuring drive — combined with the benefits of a resurgent British economy and rising exposure to lucrative African markets — should finally put to bed its recent woes and drive earnings steadily higher.

This view is shared by the City’s number crunchers, who expect Barclays to follow up last year’s chunky 13% earnings advance with an additional 43% rise in 2015, a figure that leaves the business dealing on a P/E multiple of just 10.6 times — any readout around or below 10 times is widely considered a bargain. And the multiple slips to an even-more impressive 8.7 times for 2016 as earnings are anticipated to rise an extra 19%.

Such stunning growth is anticipated to propel dividends higher once again, the payout having been locked at 6.5p per share during the past three years. A total dividend of 8.6p is forecast for 2015, creating a juicy yield of 3.5%, while an additional hike to 11.5p the following year pushes this readout to 4.5%.

Spire Healthcare Group

Independent hospital group Spire Healthcare (LSE: SPI) has been one of the worst performers in Tuesday trading and was last dealing 9.9% lower. Still, I believe evaporating investor appetite is without foundation: the business advised in March that it had delivered a seventh successive year of growth in 2014, with total revenues climbing 12% to £856m.

The analyst community expects Spire Healthcare to record a 9% earnings advance in 2015, creating a P/E multiple of 18.4 times which I consider fail value given its excellent sales outlook — the business expects “mid to high single digit revenue growth” this year alone. And this reading drops to 17.8 times for 2016 as the bottom line is expected to swell an additional 6%.

Spire Healthcare has benefitted from a steady rise from NHS, self-pay and PMI patients in recent times, a trend that looks set to continue. With the group also having received permission to build two new hospitals, in Manchester and Nottingham, as well as a radiotherapy centre in Essex, I believe the firm is in great shape to enjoy strong earnings growth in the coming years.

Tullow Oil

Unlike Spire, black gold producer Tullow Oil (LSE: TLW) has enjoyed a stellar bump in today’s business and was recently leading the London indices higher with an 7.5% gain. Although sentiment towards the oil sector has improved in recent weeks amid stabilising crude prices — not to mention Royal Dutch Shell’s £47bn acquisition of BG Group — I reckon that worsening supply/demand factors are bound to drive prices lower again.

My belief was given further credence yesterday when Chinese trade data showed exports in March fall almost 15%, exacerbating fears over slowing activity across the Asian powerhouse. Although crude imports rose 14% last month, this would appear to be the effect of opportunistic stockbuilding owing to the cheap oil price. Many analysts are tipping purchases to slow looking ahead as the economy cools and storage space at the world’s second-biggest consumer fills up.

The abacus bashers expect Tullow Oil to bounce from losses per share of 168 US cents per share to earnings of 14.1 cents in 2015, before galloping to 27 US cents next year. These projections leave the business dealing on P/E ratios of 45.1 times and 18.9 times for these years, ridiculously-high figures given the perilous state of the oil market. And with Tullow Oil also facing developmental problems at its TEN project due to territorial dispute between Ghana and the Côte d’Ivoire, I believe that these earnings projections could be set for a hammering.

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