Why Meggitt plc, Legal & General Group Plc And Amlin plc All Offer Splendid Value For Money

Today I am looking at three stocks that should be on the radar of all savvy bargain hunters.


Following a bumper start to the year, shares in defence play Meggitt (LSE: MGGT) have trekked south since February and were recently at their lowest for this year around 505p. However, I believe this weakness represents a fresh buying opportunity as improving economic conditions in the West boosts defence outlay, helped by rising geopolitical instability across the globe. Allied to this, solid civil aircraft orders are also likely to keep component sales ticking steadily higher.

These factors are expected to drive earnings at Meggitt 6% higher in 2015, and an extra 8% advance is chalked in for next year. These figures leave the business changing hands on ultra-attractive P/E multiples of 14.1 times and 13.1 times for 2015 and 2016 correspondingly — any readout below 15 times is widely considered stellar value for money.

And with revenues expected to soar higher once more, the Dorset business’ progressive dividend policy should receive a welcome shot in the arm. Indeed, last year’s 13.75p-per-share reward is expected to gallop to 15p in the current period, before rising to 16.2p in 2016. Consequently a handy yield of 2.9% for 2015 rises to a very decent 3.2% for next year, and I expect further meaty rises in the coming years as cash generation takes off.

Legal & General Group

I believe that life insurance leviathan Legal & General (LSE: LGEN) is a brilliantly-priced pick for both growth and income seekers. The business is successfully hurdling regulatory changes in the UK, its revamped product portfolio allowing its clients to benefit from new ‘pension freedom’ rules, legislation that is expected to drive savings rates to the stars in the coming years. And further afield, Legal & General’s expansion programme in the US and Asia promises bountiful returns.

Legal & General has punched tremendous, double-digit earnings expansion in recent years, and this trend is expected to keep running with a 12% rise currently pencilled in for 2015. Growth is anticipated to slow next year, although a 9% projected advance is not to be baulked at. And these forecasts create appetising P/E ratios of 14 times and 13 times for 2015 and 2016 correspondingly.

With cash heading comfortably through the roof, in my opinion Legal & General is one of the most attractive dividend picks currently available. The company has a terrific record of offering chunky year-on-year payout rises, and is expected to lift 2014’s dividend of 11.25p per share to 13.2p in 2015, and again to 14.6p in the following period. Consequently a market-mashing yield of 5% for this year charges to an even-better 5.5% for 2016.


It is certainly true that a backcloth of intense competition — combined with the effect of low interest rates and unfavourable currency movements — is likely to keep blood pressure levels at Amlin (LSE: AML) uncomfortably high in the near-term. Indeed, gross written premiums fell 1.3% in January-March, to £1.26bn as a result of these pressures. Still, for more patient investors I believe the London business remains a lucrative stock selection, underpinned by its pan-global presence.

The aforementioned problems currently facing Amlin are expected to keep the bottom line in retreat for a little while longer, and the City expects the insurance play to follow last year’s 21% earnings decline with a further 14% slide in 2015. But expectations of a 3% dip in 2016 suggest that conditions could be on the brink of turning for the better. Moreover, these forecasts also create decent value for money, with Amlin sporting earnings multiples of just 11.6 times for 2015 and 12.3 times for 2016.

But it is in the dividend stakes where Amlin really sets itself apart from the competition. The company’s weighty capital pile is expected to propel a payment of 27p per share last year to 29.1p in 2015, producing a vast yield of 6%. And this rises to a lip-smacking 6.2% for next year amid predictions of a 30.3p dividend.

But whether or not you fancy taking the plunge with the stocks mentioned, I strongly recommend you check out this totally exclusive report that picks out a broad range of big-cap winners waiting to deliver outstanding shareholder returns.

Our “5 Dividend Winners To Retire On” wealth report highlights a selection of incredible stocks with an excellent record of providing juicy shareholder returns. Among our picks are top retail, pharmaceutical and utilities plays that we are convinced should continue to provide red-hot dividends. Click here to download the report -- it's 100% free and comes with no further obligation.

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.