Can The Surges At Hargreaves Lansdown PLC, SKY PLC And Marks and Spencer Group Plc Keep On Going?

Since late January 2014, Hargreaves Lansdown (LSE: HL) shares are actually down 6%, but that snapshot hides a much more interesting story. The shares were widely considered a bit toppy back then, and some profit-taking, coupled with sell-off caused by slowing earnings, led to a slump in late October 2014 to around the 850p level.

But in the time since, a fresh spurt has seen the price put on 70% to reach 1,458p — and over five years, the price has almost trebled! But here comes the bad news: that share price climb has pushed the firm’s forward P/E as high as 37, with dividends poised to yield only around 2.5%.

Hargreaves Lansdown’s earnings growth has been impressive, and EPS is predicted to rise by 18% again in the current year. But that’s serious growth pricing, and when it looks like it’s slowing again I’d expect to see a reversion closer to the long-term FTSE 100 average P/E of 14 to 15. It’s a very well-managed company, but way too pricey for me.

Cheap telly

Over at telly and broadband supplier Sky (LSE: SKY) we’ve seen a very strong 2015, with the shares up 24% in 12 months to 1,098p. But in this case, we’re looking at a much more down-to-earth P/E of 17 based on current forecasts, with dividend yields of around 3.3%.

After three years of double-digit EPS rises to 2013, Sky’s growth went off the boil a little and we’ve had a couple of minor falls. But that should reverse again this year, with forecasts suggesting growth of 14%. First-quarter results support those predictions, too, after Sky reported a 10% rise in operating profit from a 6% gain in revenue. Customer numbers are rising nicely, as are the numbers of subscription products they’re buying.

Sky’s share price looks modest to me for a company with such good future growth prospects, and I can see further gains in the next few years.

Finally back?

Investors have had a bit of a love/hate relationship with Marks and Spencer (LSE: MKS) over the years. As a result, the share price today is only around 14% higher than it was at its 1993 peak — and we’ve been through a couple of bone-shaking booms and busts in between.

But it’s looking increasingly like the high-street favourite is finally seeing results from its turnaround plan, with Wednesday’s first-half report telling of a 6.1% rise in underlying pre-tax profit and underlying EPS up 4.9%. And though like-for-like General Merchandise (which is clothing, mainly) fell 1.2%, the firm’s online offering enjoyed a very nice 34% sales rise. Free cash flow was up, and the interim dividend was hiked 6.3% to 6.8p.

The upturn has helped push the shares up 36% since their low in October 2014, to 536p,  although they were even higher in the summer. And with forecasts of two years of growth dropping the P/E to under 14 by March 2017, while the dividend yield rises to 4%, I really can believe that M&S is back on track and looking good value.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown and Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.