With the FTSE 100 getting ever closer to the key 7,000 points level, it may seem tougher than ever to find companies that still offer considerable upside.
However, one sector that still ticks the ‘value’ and ‘growth’ boxes is banking, with a number of banks having very bright futures.
Here are three that could make a positive contribution to your finances moving forward.
Standard Chartered
Despite reporting half-year profit that was 20% down year-on-year, Standard Chartered (LSE: STAN) is expected to bounce back in 2015 with a much stronger performance. Indeed, earnings are forecast to increase by 10% in 2015 and, despite this, the company trades on a highly attractive valuation. For example, its price to earnings (P/E) ratio is just 11.3, which is far lower than the FTSE 100’s P/E of 13.9.
Furthermore, when the P/E ratio and forecast growth rate are combined to give the price to earnings growth (PEG) ratio, Standard Chartered appears to have huge appeal. Its PEG of 1.0 indicates that growth is on offer at a very reasonable price.
Banco Santander
Not to be outdone by its sector peer, Santander’s (LSE: BNC) bottom line looks set to grow at a very rapid rate. For instance, the bank is expected to post earnings increases of 23% in the current year and 21% next year. Certainly, shares are priced for growth after their 13% gains since the turn of the year, with Santander currently trading on a P/E of 15.6. However, as with Standard Chartered, a low PEG ratio of 0.7 highlights their appeal as an attractively priced growth play.
With shares in Santander also offering a yield of 6.7%, they appear to offer considerable potential for a top notch total return over the medium term.
RBS
2014 has been rather disappointing for investors in RBS (LSE: RBS). That’s because shares in the bank are up just 3% since the turn of the year and have outperformed the FTSE 100 by just 1%. However, the current year is set to see RBS return to the black for the first time since the start of the credit crunch. Furthermore, as recent results showed, write-downs are far less savage than they once were and this makes RBS’s current valuation appear to be hugely attractive.
With shares in the bank currently trading on a P/E ratio of 12.3 and offering growth potential of 7% in earnings next year, they seem to offer substantial upside potential over the medium term.
