Are Hardy Oil & Gas plc And Games Workshop Group PLC More Appealing Buys Than GlaxoSmithKline plc?

For many investors, GlaxoSmithKline (LSE: GSK) is a staple stock. In other words, it is an obvious choice in almost all portfolios, whether they are focused on income, value or on capital growth. That’s because the pharmaceutical company appears to offer superb potential in all three areas, with its share price performance over the last five years (where it has underperformed the FTSE 100 by 12%) not being reflective of the potential that it offers.

For example, GlaxoSmithKline currently yields over 6% and, even though dividends are due to flat line over the next couple of years, it still means that holding shares in GlaxoSmithKline is set to deliver over 19% in income return in the space of just three years. With the outlook for the European and Chinese economies being relatively uncertain, such a return could prove to be most welcome – especially if interest rates rise at only a modest pace.

Furthermore, GlaxoSmithKline also offers excellent value for money at the present time. For example, it trades on a price to earnings (P/E) ratio of just 17.2 which, for a major pharmaceutical company that has a hugely diversified and impressive pipeline, seems to be a very reasonable price to pay. And, with GlaxoSmithKline forecast to increase its bottom line by 11% next year, investor sentiment could improve and push its share price much higher.

Of course, other stocks also hold considerable appeal and, while GlaxoSmithKline is an obvious choice, there are strong returns on offer elsewhere. For example, miniature figurine and games manufacturer Games Workshop (LSE: GAW) has seen its share price rise by over 5% yesterday after releasing impressive results for its most recent financial year.

In fact, Games Workshop delivered an increase in pretax profit, with it rising from £12m in the previous year to over £16m last year. That’s an excellent gain when you consider that a weak Euro had a negative impact on the company’s sales and, with consumer confidence in the single-currency region also coming under pressure, it was a double blow for the Warhammer games producer. Still, dividends are on the up and, at its present price of 557p, Games Workshop yields a very enticing 6.3%. Furthermore, it trades on a P/E ratio of just 13.9, which indicates that a rerating potential is on the cards.

Meanwhile, Hardy Oil & Gas (LSE: HDY) saw its share price drop by as much as 12% yesterday, with the company’s share price now having fallen by 72% during the course of the last year. Of course, this is partly due to a weaker oil price which has caused investor sentiment to weaken in the sector.

However, Hardy has arguably been affected more than many of its peers as a result of its bottom line being in the red, with it posting a pretax loss of $26m in the last year. That’s considerably wider than the $5m pretax loss reported in the prior year, however it included a $22m impairment charge for unsuccessful exploration activities. As such, and with pretax losses due to narrow to less than $3m in each of the next two years, Hardy could see an improvement in investor sentiment moving forward – especially since it has $21m in cash and no debt.

Despite the potential of Hardy and Games Workshop, though, GlaxoSmithKline continues to be a more appealing buy at the present time, with its mix of income, value and growth potential making it one of the most enticing UK-listed stocks to own.

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Peter Stephens owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.