Today I am looking at four of London’s greatest ‘all round’ share superstars.
I am convinced both earnings and dividends should keep surging at Barratt Developments (LSE: BDEV) as Britain’s housing crisis worsens. Housebuilders simply cannot put properties up fast enough to meet demand, with low interest rates and increasingly-affordable mortgage products supercharging buyer appetite. As a result homestead prices keep on rising, and Nationwide data yesterday showed the average property value rise 3.5% year-on-year in July, to £195,621.
Thanks to this enduring imbalance the City expects earnings at Barratt to have advanced 43% in the year ending June 2015, and a further 19% rise is anticipated for 2016. As such the business deals on ultra-cheap P/E multiples of 14.3 times and 12.1 times for these years. On top of this, Barratt’s ability to generate boatloads of cash is expected to propel the total dividend to 24.6p per share for 2015 and 29.6p for the current period, yielding an impressive 3.9% and 4.7% respectively.
Despite fears of a wider slowdown in the smartphone and tablet PC markets, the City seems convinced that ARM Holdings’ (LSE: ARM) brilliant growth story should keep on rolling. While fears of market saturation are undoubtedly keeping the Cambridge firm on its toes — the company is doubling-down on innovation to hammer the competition, as well as diversifying into new tech areas — ARM’s brilliant relationships with industry giants like Apple are expected to keep earnings marching forwards.
Indeed, the number crunchers expect the chipbuilder to clock up bottom-line expansion of 68% and 19% in 2015 and 2016 correspondingly, leaving ARM dealing on high P/E ratios of 33.2 times and 27.9 times for these periods. But very decent PEG readouts of 0.5 times for 2015 and 1.4 times for 2016 illustrate the firm’s decent value relative to its growth potential.
And although dividend yields of 0.9% for this year and 1% for 2016 desperately lag the wider market, predicted payment growth of around 20% for this year AND next — to 8.6p per share and 10.3p per share — illustrate ARM’s increasingly-generous dividend policy.
Thanks to network operator National Grid’s (LSE: NG) vertically-integrated model, I reckon the London business is one of the safest picks for those seeking reliable earnings expansion. While this system safeguards the business from the regulatory pressure on revenues facing the likes of Centrica and SSE, Ofgem’s latest round of RIIO price controls is also helping to strip costs out from across the business.
These factors are expected to deliver earnings growth of 1% for the 12 months concluding March 2016, and a further 2% for fiscal 2017. Consequently National Grid sports very reasonable earnings multiples of 14.6 times and 14.2 times for these years. But it is in the dividend stakes where the power play blows away the competition, and estimated payouts of 44.1p per share for this year and 45.2p for 2017 create monster yields of 5.2% and 5.3%.
Aviation support specialists BBA Aviation (LSE: BBA) disappointed the market in midweek trading after announcing that low fuel prices and negative currency effects forced revenues 5% lower during January-July, a result that pushed pre-tax profit a third lower to $61.7m. However, the firm advised that a “continued, albeit slow, recovery in our major markets gives us confidence that 2015 will be a year of good growth with strong momentum into 2016,” underpinned by “very strong” momentum at its Flight Support division.
The City is certainly upbeat over BBA Aviation’s prospects, and expects the firm to punch earnings growth of 6% in 2015 and 13% in 2016. Consequently the aviation experts deal on attractive P/E ratios of 14.2 times for this year and 13 times for 2016. And predicted dividends of 17.9 US cents per share for this year and 18.7 cents for 2016 produce bubbly yields of 3.9% and 4% correspondingly.
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Royston Wild owns shares of Barratt Developments. The Motley Fool UK has recommended ARM Holdings and Centrica, and owns shares in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.