Forget short-term pain: buy Barclays plc, BT Group plc and BAE Systems plc for long-term gain

Today I am running the rule over three FTSE 100 (INDEXFTSE: UKX) growth stars.

Ring up a fortune

Despite the company greeting the market with bubbly full-year financials last week, shares in telecoms titan BT (LSE: BT.A) have failed to ignite. However, I feel the market may be missing a trick here.

Revenues at the firm’s Consumer division leapt 7% last year to £4.6bn, reflecting the huge sums BT has thrown at its broadband and television operations. And I expect sales to keep rising as the synergies of its acquisition of EE come to the fore, while the company’s new £6bn three-year investment in super-fast broadband and 4G should provide a further growth lever.

BT’s capital-sapping programme is expected to produce a rare earnings dip in the year to March 2017, a 7% fall currently estimated by City brokers. Still, this figure results in a very-attractive P/E rating of 14.5 times. And BT’s growth story is expected to regain traction immediately, an 8% earnings rise pencilled in for 2018 and driving the multiple to an even-better 13.5 times.

I reckon this is great value as BT’s broadband rollout programme drives revenues skywards.

Gun show

Weapons builder BAE Systems (LSE: BA), like many of its defence-sector rivals,  is not immune to the lumpy contract timings that can dent profits from year to year.

True, arms budgets in the US and UK may be back on the mend after the battering endured in the wake of the 2008/09 recession. But this is not expected to put paid to BAE Systems’ severe earnings volatility straight away. Indeed, a 4% decline is currently chalked in for 2016.

However, I expect a steady demand recovery for BAE Systems’ cutting-edge products to push earnings significantly higher beyond this year.

Western militaries certainly have plenty of incentive to bolster their capabilities, from battling terrorist activity across the globe to preparing for Chinese and Russian expansionism. And BAE Systems is also enjoying resplendent sales growth to emerging regions, too.  

Consequently the City expects BAE Systems to bounce back with a 6% bottom-line improvement in 2017, pushing this year’s P/E rating of 12.4 times to a mere 11.7 times. I believe the defence giant is too good to pass up at these prices.

Stash the cash!

Banking giant Barclays (LSE: BARC) also faces fresh earnings woe in the near-term.

The enduring PPI saga remains a millstone around Barclays’ neck, with nthe company facing a steady escalation in claims ahead of a possible 2018 deadline. As well as this, the bank’s Investment Bank arm is also facing incredible headwinds  thanks to the volatility in the global economy, while weak commodity prices are causing an extra headache.

Still, I reckon Barclays should find itself in great shape to deliver solid profits growth further out. While the firm’s plan to reduce its emerging market exposure removes a potential growth lever, Barclays’ huge presence in the UK and North America should still produce sterling revenues expansion beyond this year.

Meanwhile, Barclays’ Transform restructuring package is helping to strip costs out and turn the bank into an efficient, earnings generating machine for the years ahead.

The City shares my positive take, and expects Barclays to recover from a 9% earnings dip in 2016 with a 49% rise next year. And I reckon a subsequent P/E ratio of 7.3 times for 2017 — much improved from 11.6 times for 2016 — represents terrific value for money.

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