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Why Earnings Are Set To Launch At GlaxoSmithKline plc, Crest Nicholson Holdings PLC And British American Tobacco plc

Today I am looking at three of the FTSE’s growth greats.

GlaxoSmithKline

Pharmaceuticals giant GlaxoSmithKline (LSE: GSK) is, slowly but surely, slaying the ghost of patent expirations across key labels. The Brentford firm has seen earnings slip during the past three years, as brands like Seretide have battled the relentless entry of generic competition, and a further 20% drop is forecast for 2015.

Still, I believe the stunning progress of GlaxoSmithKline’s product pipeline should deliver a strong bottom-line rebound from next year. Sales at the firm’s Pharmaceuticals division rose 1% during July-September as its hot new labels took off — indeed, total sales of new Pharmaceuticals and Vaccines drugs clocked in at £591m in the period.

GlaxoSmithKline’s recovering revenues outlook is expected to drive earnings 12% higher in 2016, leaving the firm changing hands on a P/E ratio of 16.3 times — a reading around or below 15 times is considered decent value. With GlaxoSmithKline doubling-down on strong growth areas like HIV, where sales leapt 65% in the third quarter, and healthcare demand rocketing higher in emerging regions, I believe the medicines giant is a terrific growth bet.

Crest Nicholson

Housebuilders like Crest Nicholson (LSE: CRST) have proved to be one of the most reliable selections so far this year 2015 thanks to the UK’s worsening housing crunch. Indeed, the steady stream of positive sales and order book news across the industry shows no signs of slowing, and Crest Nicholson itself advised in June that revenues surged 38% during the six months to April, to £333.2m.

The one blot on the landscape for the housing sector has been the spectre of interest rate rises and the consequent effect on mortgage affordability. But with ONS data this week revealing a marked slowdown in the British economy, expectations of any rate hike have been well and truly kicked into the long grass.

On the supply side, the growing reluctance of homeowners to put their houses on the market is adding to a natural accommodation shortage. At the same time a combination of rising wages and favourable lending conditions is sending demand through the roof. Not surprisingly Crest Nicholson is expected to record earnings expansion of 23% and 25% for the years to October 2015 and 2016 correspondingly, creating mega-cheap P/E multiples of 11.2 times and 9 times. I consider this a steal.

British American Tobacco

Cigarette giant British American Tobacco (LSE: BATS) cheered-up the market this week when its latest financial release smashed expectations. The London firm saw underlying sales advance 4.2% during January-September, obliterating broker expectations of between 2.6% and 3.2%.

Once again the tobacco play had its five ‘Global Drive Brands’ — a stable which includes the likes of Dunhill and Lucky Strike — to thank for this solid performance. Volumes of these products galloped 7.2% during the period, helping to push their market share 1% higher from a year earlier. And British American Tobacco saw volume growth of these goods speed up to 9.5% during July-September.

The problem of adverse currency movements pushed group revenues 6.5% lower in the nine-month period, and British American Tobacco warned that “performance will moderate” in the final quarter as foreign exchange problems persist.

But with demand for the firm’s brands still taking off in developing regions, and British American Tobacco entering hot growth segments like e-cigarettes, I believe earnings should bounce back next year and beyond following an expected 1% dip in 2015. Indeed, a 7% rebound is predicted for 2016, leaving the smoking giant dealing on a P/E ratio of 17.4 times.

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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.