Today I am looking at four of the FTSE’s hottest growth prospects.
SABMiller
For those seeking electric near-term earnings growth, brewing giant SABMiller (LSE: SAB) is likely to disappoint as a combination of emerging-market pressures and adverse currency movements weighs. Indeed, the business is expected to record a 6% earnings slide in the 12 months to March 2016, a prediction that would mark a second successive slip and which would result in a slightly-elevated P/E multiple of 19.9 times.
Still, for more patient investors I believe SABMiller provides the recipe for delicious returns. Not only should the company benefit from rising consumer spending power across Africa, Asia and South America, but labels like Pilsner Urquell, Castle and Coors offer brilliant pricing power that few other can match. As a result, the brewer is expected to snap back with an 8% earnings rise in fiscal 2017, resulting in an improved P/E multiple of 18.2 times.
Skyepharma
Medical play Skyepharma (LSE: SKP) has seen its share price gallop 43% higher during the past three weeks alone, and I believe the firm’s stunning drugs pipeline should deliver further share price growth. The business pleased investors in late August when it advised sales had jumped 19% during January-June, to £40.8m, with flagship asthma treatment Flutiform enjoying a revenues bump of 129% from the corresponding 2014 period.
Like SABMiller, Skyepharma is not expected to light up the bottom line any time soon, however, and a 19% slide is currently pencilled in for 2015, resulting in a heady P/E rating of 23.6 times. But this figure collapses to 15.5 times for next year thanks to predictions of a 43% bottom-line surge. With almost two-thirds of total revenues now sourced from products launched since March 2012, I believe the healthcare play is in great shape to enjoy brilliant earnings expansion in the years ahead.
Persimmon
The housing sector has been the London stock market’s star performer so far in 2015 and Persimmon (LSE: PSN) has been one of the leading lights in this area — the stock has gained a mammoth 34% since the turn of the year. And I expect sentiment towards these companies to remain robust — Barratt Developments advised just today that pre-tax profits leapt 45% during January-June, to £565.5m.
Following today’s update, analysts over at Hargreaves Landsown advised that “a combination of low interest rates, a general lack of new housing supply, rising house prices and increased mortgage availability” helped Barratt during the first half. Clearly Persimmon is also set to continue to benefit from these factors, and the City expects the business to see earnings rise 23% and 11% in 2015 and 2016 correspondingly, creating ultra-low P/E ratios of 13.5 times and 12.2 times.
Next
I piled into retailer Next (LSE: NXT) some time ago, thanks to the steadily-improving state of the UK High Street. But I believe the clothes house still offers plenty of upside, as the dual effect of low inflation and recovering wage growth drives shoppers through the doors — Next saw sales rise 3.5% during the six months to July, a result that once again saw the business exceed prior estimates.
The company now expects revenues to advance between 3.5% and 6% for the full year. And with online shopping fuelling growth at its Next Directory division, and international sales also ticking higher, the City forecasts Next to record earnings growth of 6% for the years concluding January 2016 and 2017. These figures leave the retailer dealing on very-reasonable P/E ratings of 17.5 times and 16.4 times for these years.
