Why Diageo plc, Standard Life Plc, Barratt Developments Plc And Sports Direct International PLC Are Four Of The Hottest Growth Stocks Out There!

Royston Wild discusses the hot growth prospects over at Diageo plc (LON: DGE), Standard Life Plc (LON: SL), Barratt Developments Plc (LON: BDEV) and Sports Direct International PLC (LON: SPD).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I am looking at four FTSE 100 growth stars set to explode.

Diageo

The growth story over at Diageo (LSE: DGE) has been far from compelling in recent times. A combination of declining off-take from emerging markets — particularly due to Chinese anti-extravagance measures — and adverse currency movements has pushed the spirits giant deeply into the red in recent years. Still, I believe Diageo remains a hot earnings prospect as wealth levels in these growth regions are expected to stomp higher in the years ahead.

Indeed, the drinks giant is expected to flip back into the black in the year to June 2016, albeit by a modest 1%. This creates a P/E ratio of 21 times, an historically cheap level for the London firm. And with Diageo investing heavily in the marketing and innovation of hot labels like Johnnie Walker and Smirnoff, not to mention maintaining its exciting M&A drive, I reckon the company’s sales prospects fully merit this premium.

Standard Life

Like Diageo, insurance giant Standard Life (LSE: SL) has invested heavily to improve its product suite across the globe, and these measures are paying off handsomely as the business flows in. The financial giant announced last week that assets under management rose 2% during July-September, to £301.9bn, helped by terrific net inflows of £5.8bn. Standard Life now generates two-thirds of its third-party inflows from outside the UK, illustrating the tearaway success of its international strategy.

Standard Life is expected to punch earnings rises of 47% and 20% for 2015 and 2016 respectively, pushing a P/E ratio of 17.9 times for the current period to just 15 times in 2016. The latter is considered the benchmark that indicates a very decent bang for one’s buck. On top of this, sub-1 PEG readings through to the close of next year underline Standard Life’s exceptional value.

Barratt Developments

The housing sector has been the major stock success story of 2015, and Barratt Developments (LSE: BDEV) has gained 22% since the turn of the year. And I expect this solid momentum to continue, thanks to a worsening supply/demand imbalance. Despite enduring rhetoric from the government to build houses, the UK remains pitifully short of providing enough accommodation for its rising population. Meanwhile, a backcloth of rising employment and increasing wage packets is continuing to fuel homeseekers’ buying power.

Barratt Developments has long been a splendid earnings generator as housing prices have ticked steadily higher, and the City does not expect this trend to cease any time soon. As a result the construction play is anticipated to record an 18% earnings rise in the 12 months to June 2016, resulting in a P/E multiple of just 11.4 times. And Barratt Developments’ PEG reading for the period clocks in at just 0.6 times.

Sports Direct International

One of the most noticeable changes in the post-recessionary landscape is the determination of shoppers to squeeze the absolute limit out of their pennies. The stunning rise of grocery giants Aldi and Lidl is the most obvious illustration of this trend, but the same change in our shopping habits is helping to drive sales at discount trainer-and-tracksuit warehouse Sports Direct (LSE: SPD) steadily higher.

And the retailer’s exciting plans to expand its footprint across Europe promise to drive revenues even higher — just last month the firm assumed control of Heatons to boost returns from the Republic of Ireland and Northern Ireland. As its leisurewear continues to fly off the shelves, the City expects Sports Direct to record earnings expansion of 11% in the year to April 2016, and another 16% rise is predicted for 2017. These figures create attractive P/E ratios of 16.1 times and 14 times respectively.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »