3 Stocks Carrying Heart-Stopping Value: Barclays PLC, Talktalk Telecom Group PLC And Cobham plc

Today I am discussing three London giants that should be on the radar of all savvy stock pickers.


I believe that banking star Barclays (LSE: BARC) (NYSE: BCS.US) is in terrific shape to deliver resplendent shareholder returns. Not only is the strength of the UK economy helping to drive demand for the company’s products firmly higher, but a growing emphasis upon digitalisation is allowing Barclays to maximise surging internet banking traffic, as well as allowing it to keep stripping out costs by slashing branch numbers.

On top of this, Barclays also has excellent exposure to developing markets — it currently operates out of more than a dozen African nations — while its Barclaycard division is also making waves across the globe. Given this bubbly backdrop, the City expects the company to punch terrific earnings growth of 36% and 21% in 2015 and 2016 respectively. And these numbers drive an already-decent P/E ratio of 11 times for 2015 to just 8.8 times for next year — any number below 10 times is widely considered a steal.

And Barclays is a bountiful pick for those seeking strong dividends, too. After keeping the total dividend locked at 6.5p per share for the past three years, the likelihood of strong bottom-line growth is expected to propel the payout to 8.1p this year and to 10.7p in 2016. Accordingly a handy-if-unspectacular yield of 3.2% for 2015 leaps to an impressive 4.2% for the following 12 months.

Talktalk Telecom Group

Telecoms mammoth Talktalk (LSE: TALK) has attracted a swathe of negative headlines in Tuesday business following news that it is to hike tariffs for its broadband, television and telephone customers yet again from the start of July. This is the second rise during the past six months, a decision which the firm has put down to the huge investment it has made in its internet service.

But while these steps are unlikely to curry favour with its customers, such increases are unlikely to make a seismic difference to TalkTalk’s bottom line given that main rivals Sky and BT have embarked upon a similar path in recent months. Instead, I believe that a programme of product innovation and improvements to its ‘quad-play’ footprint should deliver strong returns.

Indeed, the City expects Talktalk to follow earnings growth of 37% for the year ending March 2015 with advances of 72% and 38% in 2016 and 2017 respectively, driving a P/E multiple of 23.7 times for this year to a much-improved 14.9 times for 2017. And with profits expected to swell, the entertainment play is expected to shell out dividends of 16.1p per share this year and 17.5p in 2017 — these projections create vast yields of 4.5% and 4.9%.


With geopolitical instability rising across the globe, and the economies of key Western defence customers back on the mend, I believe that aerospace specialist Cobham’s (LSE: COB) order book is set to become increasingly frayed in the years ahead. And with the world’s major airline operators reporting surging passenger numbers and aggressively expanding their routes, I reckon that demand for civilian aircraft parts should also ignite revenues at the Dorset business.

This view is shared by the City, and Cobham is expected to bounce back from the earnings travails of recent times to punch earnings growth of 15% in 2015 and 8% next year. Such figures leave the company changing hands on attractive P/E multiples of just 13.5 times and 12.5 times for 2015 and 2016 correspondingly — a reading below 15 times is generally regarded as decent value.

Cobham’s perky growth outlook is anticipated to keep the firm’s progressive dividend policy trucking on, and payouts of 11.5p per share for 2015 and 12.2p for 2016 are currently expected by the calculator bashers. As a result the wingbuilder’s solid 3.9% yield for this year stomps to an even-better 4.2% for 2016.

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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.