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Why Growth And Income Hunters Should Check Out GlaxoSmithKline plc, Meggitt plc And Banco Santander SA

Today I am looking at three London lovelies that provide unmissable value for money.

GlaxoSmithKline

I am convinced drugs giant GlaxoSmithKline (LSE: GSK) is a terrific stock selection for those seeking the prescription for plump returns. The issue of exclusivity losses continues to haunt the Brentford firm, but through a combination of sprinting emerging market demand — not to mention GlaxoSmithKline’s promising R&D pipeline — I believe the next generation of earnings drivers should deliver the goods further out.

Indeed, the pills play has around 40 new molecular entities (or NMEs) in late-or-mid-stage-testing, based across the lucrative growth areas of vaccines HIV, oncology, cardiovascular, respiratory and immuno-inflammation. So although a fourth consecutive earnings dip is anticipated for 2015, this time by 21%, next year’s anticipated 12% bounceback should herald a steady top-line turnaround.

These figures leave GlaxoSmithKline dealing on slightly-elevated P/E multiples of 19 times for 2015 and 17.2 times for 2016, although dividend hunters should be encouraged by GlaxoSmithKline’s confirmation last month that it should fork out an 80p per share reward in 2015, a payment rate it expects to maintain through to 2017. Such a payment would obliterate the market with a 5.7% yield.

Meggitt

I believe engineering play Meggitt (LSE: MGGT) should also deliver explosive returns in the coming years as defence spend in the West recovers. The Christchurch business advised last week that revenues surged 10% higher during January-June, to £793.7m, helped by a sustained uptick in its core markets — organic sales across its Civil Aerospace and Military arms advanced 5% and 6% respectively in the period.

And just today Meggitt announced it had boost its aerospace operations through the purchase of Cobham’s advanced composites businesses arm for $200m — the unit makes a wide array of engine parts and secondary structures for aircraft. Buoyed by the strength of Meggitt’s key sectors, the City expects the firm to enjoy bottom-line growth of 5% in 2015 and 8% in 2016, resulting in ultra-low P/E ratios of 14.1 times and 13.1 times.

Meggitt’s improving earnings outlook is expected to keep the dividend shuttling skywards, too, and predicted payouts of 15p per share for 2015 and 16.1p for 2016 create handy yields of 3% and 3.2% respectively.

Banco Santander

As personal wealth levels in critical emerging markets rattle steadily higher, I reckon banking goliath Santander (LSE: BNC) should enjoy stunning revenues expansion well into the future. The business reported late last month that profit expanded in all ten of its core global markets in the first half, highlighting the strength of the firm’s pan-global presence — total attributable profit leapt by almost a quarter, to €3.4bn.

With banking product demand in Latin America heading steadily highwards, and recovering economic strength in the UK and North America powering revenues in these places, the City expects Santander to punch earnings growth of 8% this year and 11% in 2016. Consequently the bank sports splendid P/E multiples of 12.1 times for 2015 and 10.9 times for 2016.

And although Santander vowed earlier this year to cut the full-year dividend by a third, to some 20 euro cents per share, this figure still produces a respectable yield of 3.2%, And predictions of a 22-cent reward for the following year drives this figure to a very tasty 3.6%. I fully expect dividends to keep growing as the top line explodes.

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Royston Wild has no position in any shares mentioned. 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.