Today I am looking at the prospect of four FTSE-listed fireworks.
JD Sports Fashion
Trainer house JD Sports (LSE: JD) has been one of London’s best performers since the spring, and prices have advanced 23% during the past four weeks alone. The retailer has been supported by a steady stream of positive data, and last month advised that “performance in our business has continued to be strong.” With like-for-like sales exceeding forecasts JD Sports also upgraded its full-year pre-tax profit forecasts by 10%.
And with the business embarking on a massive expansion scheme — JD Sports plans to open a further 30 stores in the current year alone — I expect sales to fashion-conscious customers to keep creeping higher. And given that earnings are predicted to advance 21% and 9% in the years concluding January 2016 and 2017 correspondingly, I reckon P/E multiples of 15.5 times and 16.3 times for these years are great value given the firm’s terrific long-term prospects.
Reckitt Benckiser
Household product producer Reckitt Benckiser (LSE: RB) has also enjoyed a stellar run of late and prices have jumped 7% since the start of July. And with good reason — its latest release during the period showed underlying sales creep 5% higher during January-June, led by strident sales across its Consumer Health and Hygiene divisions, while strength across all major geographies soothed investor fears over weakness in emerging markets.
Reckitt Benckiser has a brilliant track record of innovation across its industry-leading labels, products which range from Durex condoms and Nurofen painkillers through to Vanish stain remover. As a result City expects the consumer goods giant to see earnings rise 3% in 2015 and 7% in 2016, leaving the business dealing on P/E multiples of 26 times and 24.3 times. But such elevated ratios are nothing new for Reckitt Benckiser, and I believe the business is one of the best growth picks out there.
Card Factory
Shares in greeting card specialists Card Factory (LSE: CARD) have bumped 14% higher during the past four weeks, although a poor reception for its latest numbers today have pushed prices 2.5% lower on the day. I reckon this reaction is wide of the mark, however, as the Wakefield company posted another rise in like-for-like sales during February-July, this time by 2.7%, and reiterated its confidence in continuing to grab market share.
The budget card seller opened its 800th store during the period, and remains on course to open a further 50 stores in the current year. Subsequently the number crunchers expect earnings to rise 13% and 9% in the years ending January 2016 and 2017 respectively, pushing this year’s P/E ratio of 19.1 times to a far-improved 17.6 times for the following period. With Card Factory due to unveil plans to return surplus cash to shareholders later this year, I reckon a further shoot higher could be in the offing.
Supergroup
Fashion favourite Supergroup (LSE: SGP) has also seen its stock stomp steadily higher since the spring kicked in, and can boast a 13% advance during the past four weeks alone. With consumer spending power in the UK continuing to rise, and the business marching across the globe — the company recently acquired distribution rights in the US and launched into China — I reckon sales of its premium togs should keep on surging.
Retail revenues jumped 17% during the 12 months to April 2015, the firm announced in early July, with sales of its desirable Superdry label benefitting from bubbly store and online sales during the period. With Supergroup putting the afterburners on its expansion strategy, the City expects earnings to grow 13% in fiscal 2016 and 16% in 2017. Clearly consequent P/E ratios of 22.7 times for this year and 19.4 times for 2017 hardly make the business a brilliant value pick, but I believe the company’s highly-desirable products fully merit this premium.
