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Why Unilever plc, Banco Santander SA And Booker Group Plc Offer Incredible Value!

Today I am looking at three London giants set to deliver resplendent returns.

Unilever

Household products powerhouse Unilever (LSE: ULVR) has seen its share price gallop 14% during the past month thanks to recovering investor appetite for emerging markets. And I believe the business still offers plenty of bang for one’s buck as its formidable collection of top-level labels — from Axe deodorant to Wall’s desserts — provide unrivalled pricing power that promises to deliver stonking profits growth.

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At face value Unilever may not appear a logical choice for bargain chasers, however. P/E ratios of 22.2 times and 21.1 times for 2015 and 2016 respectively sail comfortably ahead of the value benchmark of 15 times or below. On top of this, predicted dividends of 86.9p per share for this year and 91.8p create handy-if-unspectacular yields of 2.9% and 3.1%.

Still, I believe Unilever’s terrific growth record fully merits this premium. Indeed, the popularity of the firm’s ‘Growth Brands’ enables sales to tick higher even in times of wider macroeconomic pressure, and I expect Unilever’s expansion in developing regions to provide earnings with a further boost in the years ahead — growth of 12% and 6% is chalked in for 2015 and 2016 alone.

Banco Santander

Like Unilever, Santander (LSE: BNC) also has considerable exposure to emerging regions, and the bank currently sources almost 40% of profits from Latin America and Eastern Europe. And while these regions provide plenty of long-term opportunities, as the emergence of a rising middle class drives banking product demand, it is in Europe where the financial giant is still making significant headway.

Santander advised on Thursday that ordinary profit leapt 17% during January-September, to €5.1bn, as lending to both individuals and business continued to take off. The company saw profits expand in all 10 core markets bar Poland, and in the UK — now Santander’s largest market — the bottom line leapt 28% in the nine-month period.

Sure, Santander still has some obstacles to overcome, namely the enduring weakness of the Brazilian real and also the strength of its capital base — the bank’s CET1 ratio edged to 9.9% as of September. Still, expected earnings of 5% in 2015 and 7% in 2016 result in P/E multiples of 10 times and 9.4 respectively, suggesting such fears are more than priced in. And a planned dividend of 20 euro cents per share for 2015 produces a hefty yield of 4%. I believe Santander is definitely worth a look at these prices.

Booker Group

‘Cash and carry’ play Booker Group (LSE: BOK) is a terrific selection for those seeking robust earnings and dividend expansion, in my opinion.

Like Unilever, the business may not appear cheap from a conventional standpoint — Booker Group sports P/E ratings of 26.4 times and 23.6 times in the years to March 2016 and 2017 correspondingly. But I believe patient investors should take note of the firm’s strong earnings prospects for the years ahead rather than current valuations.

Booker Group announced this month that pre-tax profit powered 10% higher during April-September, to £74.1m, and the company has backed its ambitious expansion drive to deliver further growth in a difficult market — the food giant acquired convenience heavyweights Londis and Budgens earlier this year to supercharge its retail footprint.

As a consequence Booker Group is expected to enjoy earnings growth of 8% in the current period, and which takes off to 13% for fiscal 2017. And while projected dividends of 4p and 4.6p per share create market-lagging yields of 2.1% and 2.4% respectively, I expect the payout to continue growing at a rate of knots along with profits.

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Royston Wild owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Booker. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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