Today I am looking at four FTSE favourites set to enjoy stonking earnings growth.
Ashtead Group
Investor appetite for power generator provider Ashtead (LSE: AHT) has deteriorated markedly in recent weeks, the business having conceded 14% in little over a month. But with construction activity taking off across most regions — indeed, the business has vowed to invest £1bn in the US this year alone — and its Sunbelt and A-Plant brands continuing to strip share from the opposition, I expect revenues to keep on heading higher.
Ashtead has a long history of generating brilliant earnings growth, and the City does not expect this trend to cease any time soon — indeed, expansion to the tune of 24% and 18% is pencilled in for the years concluding April 2016 and 2017 correspondingly. As a consequence Ashtead sports brilliant P/E multiples of 13.9 times and 12 for these years, comfortably below the value standard of 15 times. And PEG readouts below the bargain yardstick of 1 through to the close of 2017 illustrates the firm’s exceptional value.
Reckitt Benckiser Group
I have long sung the praises of household goods giant Reckitt Benckiser (LSE: RB), and not just down to its hulking presence in increasingly-wealthy emerging markets. From Nurofen pain pills right through to Finish dishwasher power and Dettol detergent, the London business boasts a wide portfolio of products that have pride of place in cupboards the world over. And these labels carry considerable pricing power that help the firm hurdle bumps in consumer spending.
The number crunchers expect Reckitt Benckiser to print earnings growth of 3% in 2015, a figure which rises to 8% in 2016 as the impact of macroeconomic travails in key regions abates. Although these numbers leave the business dealing on slightly-elevated P/E ratios of 23 times and 21.5 times for these years, I believe the rising popularity of Reckitt Benckiser’s products in new markets in particular makes it a very decent growth selection.
Booker Group
I believe cash-and-carry operator Booker (LSE: BOK) is in great shape to traverse the problems affecting the wider supermarket sector and post solid sales growth. Although investors should of course be aware of intensifying problems in the sector, I reckon that the popularity of Booker’s cut-price items, combined with the firm’s expansion in the convenience store segment through its purchase of Londis and Budgens, makes the stock a strong earnings selection.
The City expects Booker to keep the bottom line expanding at double-digit pace, and a 10% bounce in the year ending March 2016 is expected to be followed by an 11% rise the year after. Like Reckitt Benckiser, the company trades on marginally-high P/E multiples of 22.8 times and 21 times for these years. But for those looking to get in on the food retail sector I believe Booker is one of the better picks out there.
Persimmon
Even though Britain’s housebuilding sector keeps on churning out positive trading updates one after the other, I believe that share prices still fail to properly factor in the white-hot growth prospects of firms like Persimmon (LSE: PSN). Indeed, the York firm announced just last week that new home legal completion volumes increased by 7% in January-June, helping revenues advance a meaty 12% to more than £1.3bn.
And with Persimmon advising that homebuyer confidence continues to improve, the abacus bashers expect the business to record earnings growth of 18% and 13% for 2015 and 2016 respectively, producing P/E multiples of just 13.9 times and 12.2 times for these years. And PEG numbers of 0.8 for this year and 0.9 for 2016 underline the housebuilder’s tremendous value for money.
