The Motley Fool

3 Stocks Set To Beat The FTSE 100: Vodafone Group plc, Prudential plc And Direct Line Insurance Group PLC

Vodafone

Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) strategy of buying undervalued European assets such as Kabel Deutschland and Spain’s Ono, could finally be starting to pay off. Certainly, it has meant relatively weak earnings growth and investor sentiment for a sustained period, but with the Eurozone likely to see a major improvement from the effect of QE, Vodafone’s bottom line is set to benefit from a boost moving forward.

In fact, Vodafone is forecast to increase its earnings by 19% in financial year 2017, which would be a major improvement on the profit declines that have become all too common in recent years. And, with Vodafone also set to benefit from an increased diversity of income through the provision of other services such as pay-tv and broadband, its earnings could become more stable over the medium to long term, too.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Prudential

Although there is a relatively large choice when it comes to high quality insurance companies on the FTSE 350, Prudential (LSE: PRU) remains a stock with significant long-term profit potential. That’s at least partly because it offers excellent growth prospects, with its bottom line forecast to rise by 14% in the current year, and by a further 12% next year.

That’s ahead of the wider market’s growth rate and, despite this, Prudential trades at a rather enticing discount to the FTSE 100. This means that its shares could benefit from an upward rerating over the medium to long term. In fact, Prudential has a price to earnings (P/E) ratio of 14.7 versus around 16 for the FTSE 100, which is a difficult discount to justify given Prudential’s track record of profit growth, diversity and sound growth strategy.

Of course, there could be some instability in the short run as Prudential adapts to a new management team, but for long term investors it looks like a sound buy compared to the FTSE 100 at the present time. And, while today’s first quarter update showed relative weakness in the US and UK markets, Asia continues to be a strong growth area for the company and this highlights how Prudential’s diversity provides stability, as well as upbeat growth prospects, over the long term.

Direct Line

Although Direct Line (LSE: DLG) has reported lower gross premiums in today’s first quarter results, the insurer remains on-track to meet its full-year expectations. As such, shares in the company have risen by 1%, meaning they are now up by 27% over the last year.

And, with Direct Line’s combined operating ratio set to be between 94% and 96% this year, the company appears to be making sound progress, while cost cutting is moving in the right direction. In fact, Direct Line has managed to reduce costs to £220m from around £245m in the same quarter of the previous year.

Despite its strong share price performance, Direct Line still offers excellent value for money. For example, it trades on a P/E ratio of 11.9 and this indicates that its shares could continue to be rerated upwards and it looks set to beat the FTSE 100 over the medium to long term.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens has no position in any 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.