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Can RSA Insurance Group plc, Hikma Pharmaceuticals Plc & Meggitt plc Defy Current Fears And Keep Chugging Higher?

Today I am looking at the share price prospects of three recent big-cap risers.

RSA Insurance Group

Financial services goliath RSA Insurance (LSE: RSA) has electrified the FTSE 100 in recent weeks, with shares having galloped 6% higher since the corresponding date in June. News of a potential takeover by rival Zurich powered prices during the period, although shares have since backtracked as concerns over RSA’s asking price have whacked the likelihood of any deal materialising.

And the stock has melted further in Monday business as fears surrounding a Chinese ‘hard landing’ have intensified. Still, I believe RSA is still a great bet for those seeking long-term returns — the London firm advised in early August that pre-tax profit surged to £288m in January-June, rising from £69m in the same 2014 period.

This resplendent result is thanks to the massive transformation plan undertaken during the past 18 months, moves that have seen RSA sharpen its focus on core markets across the British Isles, Scandinavia and Canada, as well as the hot emerging regions of Latin America.

With cost reductions also running ahead of schedule the City expects the firm to swing to earnings of 30.3p per share in 2015 from losses of 14.4p the previous year, before recording a 10% advance in 2016 to 33.5p. Consequently RSA deals on very decent P/E ratios of 16.4 times and 15.1 times for 2015 and 2016 respectively.

Hikma Pharmaceuticals

Like RSA Insurance, Hikma Pharmaceuticals (LSE: HIK) has endured a torrid start to the week and was last 6.5% lower from Friday’s close. During the past four weeks the pharma play has gained more than 4%, even taking into account today’s massive downswing, and although another advance may be far-fetched given current stock market troubles I still believe the firm is a great stock selection.

Hikma announced last week that although organic revenues slipped 4% during January-June — thanks to weakness at its Generics division — that it expects sales for the full-year to edge 2% higher during the full year. The company’s Branded and Injectables operations continue to deliver the goods, with the latter area supercharged by last year’s purchase of Bedford Laboratories, giving Hikma access to 80 more marketed products and a potential pipeline of a further 20 drugs.

And the Jordanian giant is not stopping there, with Hikma having acquired Roxane Laboratories in late July, making it the sixth largest generics producer in the US. With healthcare demand growing steadily across the planet, Hikma is expected to recover from a 9% earnings drop in 2015 with a 12% rise in 2016, pushing a P/E multiple of 26.5 times for this year to a much-improved 22.6 times.

Meggitt

Prior to today’s stock market washout, aerospace leviathan Meggitt (LSE: MGGT) had registered a healthy 4% share price advance during the past four weeks. But today’s 5% slide has totally wiped out these gains, the investment community giving short shrift to fresh contract news on Monday — the Dorset firm secured a three-year, $25m support contract to provide in-service support to the Canadian Armed Forces.

But with defence spending in the West ticking comfortably higher again — helped in no small part by the wide range of conflicts currently raging across the globe — and sales at the firm’s Civil Aerospace division ticking higher as a buoyant airline industry splashes the cash on new hardware, I believe earnings at Meggitt should accelerate in the years ahead.

Indeed, Meggitt is expected to print a 5% earnings improvement in 2015, leaving the business dealing on an ultra-attractive P/E multiple of 13.5 times — any reading below 15 times is widely considered great value. And this figure moves to 12.3 times for next year amid expectations of an 8% bottom-line leap.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.