Finding good value growth opportunities may be more difficult now that the FTSE 100 is close to a record high. However, there are still a number of stocks offering investment potential, with these three shares being prime examples.
Reporting on Thursday was UK supermarket Morrisons (LSE: MRW). The company’s third quarter sales performance was positive, with like-for-like (LFL) sales growing by 2.5%, excluding fuel. Total sales, also excluding fuel, were up 2.3% and this continues a period of stronger performance for the business.
Highlights from the period included further development of own-brand products, as well as a focus on price reductions in response to weak consumer confidence. Furthermore, the company continues to focus on improving its efficiency through the introduction of a new ordering system. Such measures may become more important if the UK’s economic outlook remains relatively downbeat as sales growth may come under pressure.
Looking ahead, Morrisons is expected to record a rise in its bottom line of 13% this year. This puts it on a price-to-earnings growth (PEG) ratio of just 1.4 at its current price of 223p, which suggests that it may offer a rising share price in future. Certainly, the UK economic outlook may prove to be difficult, but the company appears to be popular with customers at the present time.
Also offering growth at a reasonable price is home shopping specialist Findel (LSE: FDL). The company has been in the process of rationalising its business in recent years, with asset disposals focusing it on its Express Gifts division to a greater extent as it takes advantage of the trend for value prices and gifting growth in the UK market.
This looks set to stimulate its profitability over the short run. Findel is expected to put two years of falling profitability behind it, with forecasts for bottom line growth of 11% in the current year and 14% next year. Despite this, it trades on a price-to-earnings (P/E) ratio of just 8.4 at its current share price of 170p. This suggests that it could offer a wide margin of safety which may mean that its share price delivers a strong recovery following a 15% fall in the last year.
While the FTSE 100 may be trading close to a record high, a number of shares still have low absolute valuations. Mothercare (LSE: MTC) currently has a share price of 98p and this puts it on a P/E of just over 10. This suggests that investor sentiment towards the company is relatively downbeat even though it has generally performed well in recent years.
In fact, following upbeat results released earlier this year, the company has recorded annualised earnings growth of around 47% in the last five years. And with its bottom line expected to increase by 6% this year, followed by a rise of 21% next year, Mothercare seems to have the right strategy to perform well from an investment perspective. With international operations, it could offer a degree of diversity and perform much better than its 8% decline of the last year.
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Peter Stephens owns shares in Morrisons and Findel. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.