Why I’m Bullish On ITV plc, Sports Direct International Plc And Amec Foster Wheeler PLC

Today’s results from ITV (LSE: ITV) show that the company is making excellent progress, as evidenced by a sixth consecutive year of double-digit profit growth. In fact, its adjusted pre-tax profit rose by 18% in 2015 and this has allowed it to announce a £400m special dividend (which equates to 10p per share).

Alongside this, ITV has increased dividends by 28% to 6p per share and looking ahead, it remains confident of its prospects in 2016. It anticipates continued revenue growth across the business and expects to outperform the television advertising market. Furthermore, ITV sees opportunities to invest across its operations, both organically and through M&A activity.

With ITV trading on a price-to-earnings (P/E) ratio of 13.4, it appears to offer excellent value for money. Not only does it have a superb track record of earnings growth, it’s due to post a rise in net profit of 12% in the current year. This indicates that further share price growth is on the cards following its capital gain of 181% in the last five years.

Accentuate the positive

Also offering an upbeat long-term future is resources support services company Amec Foster Wheeler (LSE: AMFW). Its shares have risen by as much as 9% today after the company released a positive update regarding its financial position.

In fact, Amec Foster Wheeler has now completed the refinancing of its main debt facilities by entering into a new facility with a syndicate of 20 banks. This gives Amec Foster Wheeler substantial headroom and with energy prices being low and investment across the industry coming under pressure, this could prove to be a major positive for the company’s long-term future.

With Amec Foster Wheeler trading on a P/E ratio of 8.2, there’s clear upward rerating potential. Certainly, 2016 is set to be another tough year for the business, with its bottom line due to fall by around 16%. However, with growth forecast to return next year and its financial position being clearer following today’s update, it could prove to be an excellent long term buy.

Think long-term

Meanwhile, this week has seen Sports Direct (LSE: SPD) drop out of the FTSE 100 after a share price fall of 43% in the last three months. While further falls could be possible due to FTSE 100 tracker funds selling shares in the retailer and its earnings being set to fall by 4% in the current financial year, its long-term investment potential remains sound.

A key reason for that is Sports Direct’s valuation. With its net profit expected to rise by 5% next year and by a further 9% in the following year, it has a forward P/E ratio of just 9.8. This indicates that an upward rerating is on the cards and while its international operations have thus far disappointed, there’s still potential for improved sales growth in the UK and abroad.

Certainly, Sports Direct may need to refresh its strategy as consumer disposable incomes rise in real terms and price becomes less important to consumers. But with a reputation for good value, Sports Direct could remain popular even during improving economic conditions.

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Peter Stephens owns shares of ITV. 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.