Buckle up! Why earnings at Apple Inc., GKN plc and Barratt Developments plc look set to explode

Today I am discussing three stocks that I believe have splendid growth potential.

Manufacturing marvel

Despite current top-line troubles, I am convinced engineering giant GKN (LSE: GKN) is a splendid stocks for those seeking terrific earnings expansion in the years ahead.

The company saw revenues clock in at £2.18bn during January-March, up just 1% on an organic basis. Challenging agricultural markets caused sales at its GKN Land Systems division to slump 6% during the quarter, while organic revenues at GKN Aerospace were flat year-on-year.

Still, the resilience of the Redditch firm’s GKN Driveline arm gives plenty of reasons to be optimistic, in my opinion. Organic sales growth of 4% here outstripped global car production growth of 1%, GKN benefitting from higher vehicle loadings and ongoing strength in the ‘premium’ car segment.

And I expect revenues to roar higher once current softness in car and civil aeroplane demand abates.

The City expects GKN to bounce from a 2% earnings decline in 2016 with an 8% rise next year. And I reckon consequent P/E ratings of 9.8 times and 9 times are too good to pass up on.

Housing hero

Fears over the impact of a possible ‘Brexit’ on house prices has weighed on the likes of Barratt Developments (LSE: BDEV) in recent weeks. Chancellor George Osborne fed the flames late last month by cautioning that home values could tank by as much as 18% should Britain opt out of the European Union.

These comments did little to assuage investor confidence already whacked by rising levies and tighter lending restrictions on buy-to-let investors and those owning second homes.

While the result of the referendum could indeed cause problems for Britain’s homes market, I believe Barratt and its fellow housebuilders should still enjoy strong returns in the years ahead as the UK’s housing shortage is unlikely to disappear any time soon.

This view is shared by the City, and Barratt is expected to print earnings growth of 19% and 10% in the years to June 2016 and 2017 respectively. And these projections produce very-attractive P/E ratios of 10.1 times and 9.2 times.

Take a bite

Tech titan Apple (NASDAQ: AAPL) may not be the flavour of the month as concerns circulate over tanking iPhone and iPad sales. Indeed, shares dipped below the $100 marker in May following more disappointing sales data — Apple saw shipments of its smartphones and tablet PCs slip 16% and 19% respectively during January-March.

However, there is plenty for investors to remain optimistic about, in my opinion. Revenues at Apple’s Services division continue to take off, and these surged 20% year-on-year during the quarter. And initial sales of the firm’s Watch have been encouraging.

Of course Apple’s fortunes remain dependent upon the performance of the iPhone. But I believe the launch of the seventh generation of the handset in the coming months will spark a top-line recovery, particularly if talk of revolutionary changes like an all-glass design come to pass.

The number crunchers expect the Cupertino-based business to bounce from a 10% earnings dip for the period to September 2016, with a 9% advance in the following 12-month period. And I reckon consequent P/E ratings of 11.9 times and 11 times represent stunning value for a stock of Apple’s proven quality.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Apple. The Motley Fool UK owns shares of GKN and has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.