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Why I Would Buy QinetiQ Group plc, Marston’s PLC And easyJet plc

Today I am looking at the investment prospects of three headline makers in Wednesday business.

QinetiQ Group

Defence leviathan QinetiQ Group (LSE: QQ) failed to cheer the market despite releasing positive trading details, and the stock was recently dealing 0.7% lower on the day. Although the launch of the UK’s ‘Strategic Defence and Security Review’ has seen some contract awards being deferred, the firm advised that “revenue under contract is as expected at this stage in the financial year” and that it does not require any significant contract wins to meet full-year expectations.

QinetiQ, like the rest of the arms sector, would have cheered this month’s Budget, which vowed to keep defence spend locked at 2% of domestic GDP through to 2020 — the Ministry of Defence is responsible for two-thirds of QinetiQ’s sales. And with budgetary conditions also improving in the US, too, QinetiQ is expected to put recent earnings travails behind it and punch growth of 1% and 3% in the years ending March 2016 and 2017 correspondingly.

These projections can hardly be deemed electrifying, but they still leave the business dealing on very decent P/E ratios of 15.6 times for this year and 15.2 times for 2017. As well, improving trading conditions are also anticipated to underpin excellent dividend expansion — QinetiQ’s payment of 5.4p per share last year is expected to rise to 6.1p in 2016 and 6.7p in 2017, driving a yield of 2.5% for this year to 2.8% in 2017.

Marston’s

Pub chain Marston’s (LSE: MARS) has fared much better during Wednesday trading, however, bucking the crushing downtrend of recent weeks and shares were last 3.4% higher on the day. The Midlands business announced that like-for-like sales had grown 1.7% in the nine months to mid-July, and that underlying sales growth had accelerated to 1% during the final 10 weeks of the period.

Demand for the brewer’s ales is hot property right now, and sales of Marston’s beverages advanced 4% during the nine months. And with the firm bent on adding to its suite of 1,600+ pubs well beyond this year, revenues are in great shape to keep in charging. Accordingly the number crunchers expect Marston’s to enjoy earnings expansion of 8% in the year concluding September 2015 and 9% in 2016.

These forecasts leave the stock changing hands on ultra-attractive P/E multiples of just 12.5 times and 11.4 times for 2015 and 2016 respectively. And when you factor in prospective dividends of 7p per share and 7.4p for these years — numbers that produce chunky yields of 4.4% and 4.7% — I believe Marston’s is a terrific pick for value hunters.

easyJet

Like Marston’s, budget flyer easyJet (LSE: EZJ) was received well by the market in midweek trading following another positive financial release — the Luton business was last dealing 4.2% higher from Tuesday’s close. The airline advised that revenues dipped 1% during April-June, to £1.2bn, caused by a fire at Rome’s Fiumicino airport and strike action in France.

Still, easyJet’s results were far better than expected, confirming fears that recent heavy share price weakness has been overcooked. And with the business expanding its fleet as well as the number of routes and hubs it operates from, I believe revenues should continue stomping higher — easyJet carried 6.2% more travellers during the quarter, to 19.1 million.

The City shares my bullish take on the business, and earnings growth of 12% and 10% is pencilled in for the years ending September 2015 and 2016 correspondingly. These figures create brilliant earnings multiples of 13.3 times and 12.1 times. And when you factor in dividend projections of 51.8p per share and 57.7p for these years, yielding 3% and 3.4% respectively, I believe easyJet is a great stock selection.

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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.