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Could Ibex Global Solutions PLC And Babcock International Group PLC Outperform Unilever plc?

Today’s trading update from contact centre and outsourcing specialist Ibex (LSE: IBEX) is encouraging and shows that the company is making strong progress.

The key takeaway for investors is that Ibex expects its full year results to be in-line with expectations following a rise in both its top and bottom lines. Furthermore, key, new contracts have been won and Ibex has also benefitted from increasing revenues within its existing customer base. Many of these new contracts are in the insurance and transportation sectors, with Ibex also having strengthened its service offering via the establishment of new sites in the US to, among other things, provide bi-lingual services for the growing Hispanic market in the US.

Looking ahead, Ibex’s new management team is expected to lead the company to deliver stunning growth in its earnings. For example, in the current year Ibex’s bottom line is forecast to rise from 2.7p per share in 2014 to 9.75p per share. That’s an increase of 3.6 times and, in 2016, further growth of 34% is being forecast.

Clearly, such a strong growth rate is likely to improve investor sentiment in Ibex. Despite such strong growth, however, Ibex trades on a price to earnings (P/E) ratio of 13.2, which indicates good value for money. And, when next year’s growth prospects are taken into account, it equates to a price to earnings growth (PEG) ratio of just 0.3, which indicates that Ibex could continue the run that has seen its shares rise by 18% since the turn of the year.

Of course, there are other strong investment opportunities within the support services sector. For example, Babcock (LSE: BAB) is expected to deliver double-digit profit growth in each of the next two years, with its bottom line set to rise by 10% this year and by a further 11% next year. And, with it having a PEG ratio of just 1.1, its shares appear to offer excellent value for money after having fallen by 7% since the turn of the year. Furthermore, Babcock yields 2.7% and has a payout ratio of just 35% and this indicates that its shareholder payouts could move significantly higher.

Meanwhile, consumer goods company Unilever (LSE: ULVR) also has very upbeat growth prospects. Its bottom line is expected to rise by 14% this year and, while its PEG ratio of 1.7 is higher than those of Ibex and Babcock, it is a far more stable business with greater diversity and superior financial strength. As such, Unilever appears to be worthy of a premium – especially with its geographical exposure positioning it so as to take advantage of a developing world that is demanding a greater volume of premium lifestyle products.

Additionally, Unilever seems to have greater customer loyalty than either Babcock or Ibex. Certainly, their services are high quality and this is shown in their strong earnings potential. However, Unilever has a huge amount of brand loyalty and this allows it to maintain high margins even when the performance of the global economy is somewhat disappointing. In other words, Unilever appears to have a wider economic moat than either Ibex or Babcock, which makes its shares worthy of their premium and the preferred option at the present time.

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