The Motley Fool

Should You Stash Your Cash In Banco Santander SA, Bonmarche Holdings PLC Or Petra Diamonds Limited?

Today I am looking at three stocks interesting the market in Friday business.


Despite Santander (LSE: BNC) losing ground today due to the evolving Greek debt crisis, I am convinced that the global banking goliath’s sprawling presence across Latin America makes it an irresistible pick for investors seeking long-term earnings growth. Industry peer HSBC’s (LSE: HSBA) announcement earlier this week that it was withdrawing from the continental heart of Brazil prompted investors to reassess the riches on offer from such regions.

Still, I believe that Santander’s position as a market leader across much of South America — the institution sources almost 40% of profits from the territory — should deliver excellent earnings growth as an emerging middle class supercharges banking product demand. This view is shared by the City, and the Spanish bank to is anticipated to see earnings rise 11% and 12% in 2015 and 2016 alone.

These projections produce über-appealing P/E multiples of 12.3 times and 11 times — a reading below 15 times is widely considered brilliant value. Meanwhile, a planned dividend of 20 euro cents per share for this year creates a chunky yield of 3.1%, and I expect payouts to march comfortably higher next year and beyond in line with earnings.

Bonmarche Holdings

Clothes retailer Bonmarche (LSE: BON) greeted the market with an explosive financial update in end-of-week trade and was recently dealing 5.9% higher as a result. The Wakefield business noted that revenues leapt 8.7% during the 12 months to March 2015, to £178.6m, a result that drove pre-tax profit 55.3% higher to £12.4m.

The company has invested huge sums in expanding both its store network — some 29 new outlets were opened last year — as well as broadening its multi-channel proposition, a programme that propelled internet sales 36% higher in 2015. And the City expects Bonmarche’s budget fashions to remain in vogue with shoppers, the firm expected to clock up earnings growth of 8% and 5% in 2016 and 2017 respectively. These figures that create decent P/E ratios of 12.3 times and 11.5 times.

And the impact of improving consumer spending power should also keep dividends stepping higher, too. Last year’s 6.8p per share reward is anticipated to leap to 7.9p in 2016, creating a handy 2.9% yield. And this readout climbs to 3.2% for the following year amid forecasts of an 8.8p payment.

Petra Diamonds

Unlike Bonmarche, natural resources play Petra Diamonds (LSE: PDL) spooked the market following a hugely-disappointing update and was recently dealing 9.2% lower in Friday trade. The Jersey-based business advised that it expects full-year revenues to slip to $430m in the year ending June 2015, down almost 9% from last year’s turnover of $471.8m.

Although Petra advised that its full-year production estimate of 3.2 million carats remains frozen, revenues are expected to dive as increased volumes of smaller, less valuable diamonds — combined with reduced recovery of high-quality stones — from its Finsch and Cullinan mines in South Arica weighs.

At the time of writing analysts expect the business to punch a 19% earnings decline in fiscal 2015, resulting in an elevated P/E multiple of 22.2 times. Although Petra advised that output should improve from next year due to “increasing production from less diluted areas and from new mining areas,” should current production problems impact revenues persist beyond this year — uncertainty over product quality and volumes are common across the mining industry, of course — shares look likely to keep heading lower, a scenario that remains to be priced into the stock.

But regardless of whether you share my views on the firms mentioned, I strongly recommend you check out this totally exclusive report that picks out a clutch of FTSE 100 winners primed to deliver exceptional 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.