Companies that are able to deliver high earnings growth generally become more popular among investors. After all, the business world is designed to enable profits to be made, and those companies which are relatively successful at doing so are likely to become increasingly in demand.
With that in mind, here are two shares with bright financial outlooks. They could therefore deliver improved share price performance in the long run.
Reporting on Tuesday was business-to-business information, insight and events group Centaur Media (LSE: CAU). The company has experienced challenging headwinds in some of its markets, but has nevertheless performed in line with market expectations. It continues to make good progress regarding its cash collection and debtor reduction. Its transition away from print advertising is also progressing, with it set to represent less than 4% of total revenues in 2018. The company also announced the appointment of a new Chairman in its update.
Looking ahead to next year, the business is due to report a rise in earnings of 14%. This could help to improve investor sentiment in the stock after what has been a rather mixed number of years. And with it trading on a price-to-earnings growth (PEG) ratio of just 1.1, it appears to offer considerable upside potential.
In addition, Centaur Media also has a relatively bright outlook from an income perspective. It has a dividend yield that is currently in excess of 6%, and this could help to improve investor sentiment. Inflation has recently risen to 3.1% and with the prospect of an even higher rate in future, the company could be a sound means of overcoming a major to risk to investors in 2018.
Strong track record
Of course, investors may also begin to increasingly reward companies with a solid track record of growth as well as stocks that offer high levels of earnings increases. For example, food supplier Compass Group (LSE: CPG) has an excellent history of delivering high earnings growth, with its bottom line having risen in each of the last five years. In fact, its earnings growth rate has averaged over 11% during that time, which may appeal to investors ahead of Brexit.
Clearly, Brexit could prove to be a positive change for the UK economy. It may provide increased growth potential in the long run. However, in the short run it may mean added uncertainty as business and consumer confidence comes under pressure. This could make defensive shares such as Compass more attractive to investors, which could result in a higher rating being applied to the company’s shares.
With a price-to-earnings (P/E) ratio of just under 20, Compass Group may appear to be relatively expensive at the present time. However, with a defensive business model and a track record of consistent earnings growth, it could be a worthwhile share to hold given the macroeconomic uncertainty which may be ahead for UK investors.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.
Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Compass Group. 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.