Today I am running the rule over a collection of mid-cap marvels.
Build bountiful returns
I believe that construction play Bellway (LSE: BWY) is a terrific growth pick thanks to the housing market’s growing supply/demand imbalance.
A combination of improving homebuyer affordability, low interest rates and increased competition by Britain’s lenders is helping drive homes demand through the roof. At the same time government newbuild targets remain insufficient, while existing homeowners are becoming increasingly reluctant to put their properties on the market in expectation of further price rises.
As a consequence Bellway is expected to enjoy a 26% earnings bump in the year to July 2016, resulting in a mega-low P/E multiple of 9.2 times. And a chunky 3.5% dividend yield seals the investment case, in my opinion.
Watch and learn
A steady stream of blockbusters in recent years has meant that record numbers of people are regularly taking a trip to the ‘flicks’, and an expected continuation of this trend should allow Cineworld (LSE: CINE) to keep punching plump profits growth well into the future. Furthermore, the firm’s expansion into Eastern Europe and Israel also promises rich returns.
The City has pencilled in 9% earnings growth for 2016 alone, resulting in a reasonable P/E rating of 16.2 times. And a predicted 16.8p per share dividend yields a handy 3.3%.
A dividend dynamo
Despite current revenues troubles, I believe that payment specialist PayPoint (LSE: PAY) is in great shape to deliver stunning shareholder returns as activity across its retail base ignites. The company operates 28,300 outlets across the country, from which it operates a variety of services from money wiring and bill payments through to parcel collection.
The number crunchers expect PayPoint to bounce from a rare 6% earnings slide in the period to March 2016 with an 18% rise in 2017, resulting in a P/E rating of just 11.2 times for next year. Meanwhile, a dividend yield of 6.1% should come as serious interest to income chasers.
Box up a beauty
Thanks to packaging giant DS Smith’s (LSE: SMDS) commitment to innovation, I reckon the business is in the box seat to enjoy resplendent earnings growth in the years ahead. On top of this, the London business also remains busy on the acquisition front to bolster its position in lucrative European marketplaces.
The ‘Square Mile’ expects DS Smith to follow a 6% earnings advance in the year to April 2016 with a 12% rise in 2017, creating a decent P/E rating of 13 times for the latter period. And a chunky 3.5% dividend yield underlines the firm’s excellent value for money.
A clothing colossus
Like DS Smith, clothing giant Supergroup is also aggressively expanding overseas to turbocharge sales of its white-hot Superdry products. Last year the business acquired the distribution rights for its wares in the US, while its decision to open stores in China underlines the terrific global popularity of its fashionwear.
The City subsequently expects Supergroup to enjoy earnings rises of 16% and 19% in the years to April 2016 and 2017 correspondingly, pushing a P/E rating of 19.7 times for the current period to 16.7 times for next year. And I expect multiples to keep toppling as demand explodes in the years ahead.
