Today I’m looking at the investment prospects of three London-quoted stock giants.
A fashionable growth selection
‘Suiters and booters’ Moss Bros (LSE: MOSB) once again cheered the market with the latest financial update, a familiar trend as its long-running restructuring drive delivers the goods.
The tailoring play advised that like-for-like sales galloped ahead 4.8% during the 23 weeks to 9 January, while gross margins improved by 2.8% in the period. On top of surging online sales (internet takings at Moss Bros soared 32.7% year-on-year) the company’s store refitting programme is also attracting punters through the door. And Moss Bros plans to refurbish an extra 20 outlets in the forthcoming year.
The City expects Moss Bros to deliver earnings growth of 7% and 17% in the years to January 2016 and 2017, respectively, figures that produce slightly-elevated P/E ratings of 23.6 times and 20.1 times. But investors can take consolation from projected dividends of 5.5p per share for 2016 and 5.7p for next year, numbers that create huge yields of 5.4% and 5.6%, respectively.
A roaring retail pick
Like Moss Bros, B&M European Value Retail (LSE: BME) also released bubbly trading numbers during Thursday business.
The ‘bargain’ retailer announced that total sales leapt 22.8% in the three months to 26 December, to £647.8m, shrugging-off the impact of tough conditions as mild winter weather dented demand for the firm’s winter goods. Indeed, B&M enjoyed record demand during the Yuletide period and is confident that its store expansion programme should continue to deliver plentiful returns. The business plans to unveil another 10 outlets in the year to March 2017.
For the current year B&M is anticipated to record earnings growth of 20%, and a further 22% advance is predicted for 2017. Subsequent P/E multiples of 24.6 times and 20.5 times for these years may appear expensive, but I reckon these figures should continue to topple in the coming years as B&M’s growth strategy pays off.
Mobile giant on the march
Thanks to improving demand in established and developing economies alike, I believe telecoms giant Vodafone (LSE: VOD) is a terrific bet for solid earnings expansion in the years ahead.
The fruits of huge organic investment, combined with shrewd bolt-on purchases like Kabel Deutschland and Ono that are major operators in the red-hot quad play segment, has worked wonders in turning around the firm’s embattled European operations. And network improvements further afield are also paying off handsomely. Vodafone saw organic service revenues leap 8.7% in lucrative African, Asian and Middle Eastern marketplaces between July and September.
Vodafone is expected to record a 12% earnings decline in the year to March 2016, although a 19% bounceback is predicted for 2017. Such projections create massive P/E ratings of 45.6 times and 38.7 times, respectively, but a predicted dividend of 11.5p per share to the close of next year (yielding a very impressive 5.3%) goes a long way to offsetting this shortfall, in my opinion. I reckon Vodafone will prove a canny long-term selection for both growth and income seekers.
