2015 has been rather disappointing thus far for investors in AstraZeneca (LSE: AZN) (NYSE: AZN.US). That’s because its shares have fallen by 5% since the turn of the year, while the FTSE 100 has risen by 2% despite uncertainty surrounding the UK General Election and also the Greek debt crisis.
However, looking ahead, things could be a whole lot different for the pharmaceutical company, with the next few years set to see it transition from a company that has a bottom line under severe pressure towards being a business that offers impressive levels of profit growth.
In fact, AstraZeneca has been guiding the market towards positive earnings growth from 2017 onwards and, in the meantime, it appears as though further acquisitions will be made as it seeks to quicken its march towards growth status. And, despite this, AstraZeneca continues to offer excellent value for money – as evidenced by a price to earnings (P/E) ratio that stands at just 15.7 which, for a global pharmaceutical stock that itself could become a takeover target, seems rather low.
Furthermore, AstraZeneca continues to offer reduced volatility and has a relatively low correlation with the performance of the wider economy. So, while the Greek debt crisis may be drawing to a close, further problems in the Eurozone may hit the company’s share price less severely than its index peers. Evidence of this can be seen via a beta of just 0.9.
Clearly, a lack of volatility is not on offer at oil services company, Petrofac (LSE: PFC). Its shares have risen by 22% since the turn of the year, but are still down 27% in the last twelve months as investor sentiment for oil-focused stocks has declined. However, Petrofac continues to offer a robust balance sheet, sound strategy and, with its bottom line forecast to grow by 83% next year, investor sentiment could continue to improve significantly over the medium to long term.
That’s especially the case since Petrofac has a forward P/E ratio of just 8.7, which makes it one of the cheapest and best value stocks in the FTSE 350. Certainly, more volatility is almost certain to lie ahead, but significant capital growth also appears to be on the cards, too.
Meanwhile, today’s update from recruitment company Michael Page (LSE: MPI) was not particularly well received by the market. Despite posting a rise in revenue of 6.6% in the first half of the year, shares in the company are currently down by 2% as a result of the impact of a weak Euro on the company’s figures. In fact, were it not for the depreciation of the single-currency, Michael Page would have reported a 10.8% rise in sales, with an improving global economy helping to stimulate its top-line performance.
Looking ahead, Michael Page is forecast to increase its bottom line by 14% in the current year and by a further 26% next year. This, when combined with a P/E ratio of 25.9, equates to a PEG ratio of around 1, which indicates that its shares could continue to rise despite them being 32% higher than they were at the turn of the year.
Peter Stephens owns shares of AstraZeneca and Petrofac. The Motley Fool UK owns shares of Petrofac. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.