However, it wasn’t a shock to see CRH’s investors head for the exits towards the end of last year as fears over the health of Western European and North American economies grew. The company sources more than 90% of revenues from these regions, with sales generated in the former fractionally shading those created in the latter.

Despite its reliance on strong conditions in these established regions though, and its tiny exposure to faster-growing economies in Asia, Latin America and Central and Eastern Europe, City analysts are expecting profits at the firm to actually pick up. A 21% bottom-line advance is forecast for 2019, up from 11% last year.

Strong markets

Even though broader economic conditions in its core markets remain a little uncertain, critically for CRH the construction markets in the US and Europe remain quite robust. In fact, most recent evidence shows they are going from strength to strength.

The latest report from the Commerce Department showed construction spending in the United States struck nine-month highs in February after a 1% rise. This was the third monthly increase on the bounce and was helped by government expenditure hitting record highs and spending on private construction projects advancing too.

Construction conditions in the eurozone have also bounced back more recently, with output here jumping 3% in February, according to Eurostat. And this represented the best month-on-month improvement for exactly two years.

The elephant in the room remains the poor condition of the US housing market though, the latest health check on which the Commerce Department showed new home starts in March fell to their lowest level since mid-2017. Helped by falling mortgage rates though, many commentators believe a bounceback is just around the corner.

Making a statement

Conditions appear ripe for CRH to continue thriving then, allowing it to release some more great trading statements like the one from earlier this week.

In its first-quarter update it declared it had made “a positive start to the year” with like-for-like sales up a bulky 7% from the corresponding 2017 period. Sales volumes benefitted from good weather in its markets and it enjoyed good momentum across most of its major markets, it added, while pricing improvements across its main product lines also helped boost the top line.

What’s more, CRH said group EBITDA is likely to rise to €1.5bn for the first half versus the €1.13bn created a year earlier and, barring any major market disruption, earnings for the second half should also be ahead.

CRH is clearly in great shape yet, at current prices, it trades on a forward P/E ratio of just 14.5 times. Such a low valuation leaves plenty of scope for its share price to keep rising then. I expect it to do just that as 2019 progresses.

The post Have £3,000 to spend? A cheap FTSE 100 stock I’d buy following this news appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any of the shares mentioned. 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.

These advantages come in all shapes in sizes. Take leading building materials business CRH (LSE: CRH) for example. This business is the largest supplier of building materials in the world, employing 90,000 across several continents.

Competitive advantage 

Not only does CRH have size on its side, it also operates in a regulated industry, which gives a certain degree of protection against competition. An upstart can’t just go and open a new concrete production plant or quarry wherever it wants. A new competitor first has to find a suitable piece of land and is then subject to a lengthy planning process before it can even start construction.

This arduous process is why CRH prefers to buy rather than build. Year-to-date, the firm has already forked out €0.2bn on 16 bolt-on acquisitions/investments, and there will be more deals to come as management has been successfully executing this strategy for years.

Near term growth 

All of the above leads me to the conclusion that CRH is an excellent buy-and-forget investment for the long term, and analysts are predicting big things from the group in the near term as well.

The City has pencilled in earnings growth of 17.5% for 2019 and 11% for 2020. CRH’s first-quarter trading update implies the firm is well on the way to meeting this growth target with sales up 7% on a like-for-like basis for the first three months of 2019. 

Also, analysts are expecting the firm’s dividend payout to shareholders to rise by around 10% over the next two years. As the distribution is covered 2.5 times by earnings per share, I wouldn’t rule out further growth in the years ahead. The yield currently stands at 2.6.%.

Brand power 

Another stock I’m interested in as a buy-and-forget play is Burberry (LSE: BRBY). The luxury fashion house’s competitive advantage is its brand. Shoppers all over the world are happy to pay a premium for the company’s clothes and accessories, and the business doesn’t have to spend billions to keep customers coming back. As a result, its profit margins and cash generation are above average.

Last year, the company reported an operating profit margin of 17%, almost double the market average, while its return on capital employed — a measure of profit for every £1 invested in the business — was 29.5%.

Cash returns

Fat profit margins have allowed Burberry to return billions to investors while keeping funds back for a rainy day. At the end of 2018, it reported a net cash balance of £650m after returning £520m to shareholders via buybacks and dividends during the year.

I expect this trend to continue for the foreseeable future. I think the stock’s current valuation of 23.7 times forward earnings isn’t too much to pay for this leading fashion brand that has a strong track record of returning cash to investors.

The post 2 more FTSE 100 dividend stocks I’d buy and forget with £2k appeared first on The Twelfth Magpie.

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Rupert Hargreaves does not own any share mentioned. The Motley Fool UK has recommended Burberry. 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.

During the course of 2018 the FTSE 100 has been peppering the market with upgrades to its profits estimates, and it was at it again just this week following the receipt of positive half-year results. Next said that better-than-expected sales in August and September helped full-price sales in the first half of fiscal 2019 rise 4.5%, smashing the 1% increase forecast in January as well as the 2.2% rise predicted in May.

As a result, the clothing colossus now expects pre-tax profits for the 12 months to January 2019 to be £10m better it last expected, at £727m and up fractionally from last year’s £726.1m. City brokers are even more ambitious, though, forecasting a 4% bottom-line rise this year. A similar increase is anticipated for fiscal 2020.

Still not tempting

Next may have done an admirable job of defying gravity thus far but I still reckon it’s in danger of succumbing in the months ahead.

Latest figures from the Confederation of British Industry showed the retail sales balance dropping to +23 for September from +29 the month before. And the body suggested that things could be about to get worse, commenting that “although the summer months seem to have provided a boost to retailers after a weak first quarter, we expect momentum to be relatively subdued going forward as firms continue to grapple with anaemic growth in real household earnings and structural changes such as digital disruption and new market entrants.”

Right now Next can be picked up on a conventionally-cheap forward P/E ratio of 12.6 times. But given the twin troubles of dwindling spending power in the UK and rising competition, I’m still not tempted to buy into the share today, even if summer spending has been better than anticipated.

A better bet

Conversely, I feel that fellow Footsie play CRH (LSE: CRH) can be considered a genuine bargain. At current prices CRH’s forward P/E multiple sits bang on the widely-regarded value watermark of 15 times.

True, it’s expected to endure a little bottom-line trouble in 2018 — the City is forecasting a 9% earnings dip right now — but CRH is expected to come bouncing back with a 17% advance in 2019, mimicking the strong advances of recent years.

And it’s not difficult to see why the number crunchers remain optimistic over the building materials firm. In critical European territories CRH commented as recently as last month that “construction markets continued to recover and pricing gathered momentum” in the first six months of 2018, while in the Americas it also witnessed “solid volume and price growth against a positive economic backdrop,” it said.

The company’s colossal appetite for acquisitions also convinces me that the long-term revenues outlook remains extremely rosy. It has made a huge 22 takeovers in 2018 so far, including the game-changing purchase of North American cement specialist Ash Grove, and two investments elsewhere.

And so I would consider the FTSE 100 firm worthy of a premium rating given its strong revenues outlook, not to mention the probable profits upside from its ambitious plan to boost margins by 300 basis points by 2021 on an organic basis. I believe that now is a great time to buy into the global materials powerhouse.

The post Are these FTSE 100 stocks brilliant bargains or just value traps? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any of the shares mentioned. 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.

Over the last five years, these FTSE 100 dividend stocks have both risen by more than 85%. Alongside this they’ve paid a growing stream of cash dividends. Despite this, neither company looks obviously expensive to me today. So in this article I’m going to take a closer look at both and give my verdict on each stock.

Concrete results

Cement giant CRH (LSE: CRH) is one of the world’s largest producers of cement, concrete and other building materials. More than half the group’s profits come from the Americas, with most of the remainder from Europe.

Today’s half-year results suggest that it’s business as usual for this industrial group. Sales rose by 1% to €11,944m during the period, while rising costs and severe winter weather pushed operating profit down by 2.5% to €592m.

What comes next?

Today’s results look to be in line with expectations for the full year to me. But it’s worth noting that the shape of this group is constantly changing. Chief executive Albert Manifold has made extensive use of acquisitions and disposals to try and improve the growth and profitability of this business.

Mr Manifold’s efforts have been fairly successful. Revenue has risen from €17,136m to €25,220m since 2014, a 47% increase. Operating profits have risen from €834m to €2,095m over the same period, lifting the group’s operating margin from 4.8% to 8.2%.

One downside of this acquisitive growth is that net debt is quite high, at €8.1bn, or 2.5 times earnings before interest, tax, depreciation and amortisation (EBITDA). This is the top end of what I’m comfortable with, especially as CRH’s business does carry some cyclical risk.

The shares currently trade on 15 times 2018 forecast earnings, with a prospective yield of 2.4%. Further progress is possible, but at this level I’d rate the stock as a hold.

Packaging profits

I’m more excited by the opportunities presented by cardboard packaging group Mondi (LSE: MNDI). This business has also grown by acquisition but in doing so has become far more profitable than CRH.

Underlying operating profit has risen from €699m in 2013 to €1,018m in 2017. But this growth has also improved the company’s profit margins. Mondi’s operating margin last year was a creditable 13.7%, and the business generated a return on capital employed of 16%, roughly double that of CRH.

Acquiring smaller rivals and consolidating production seems to make sense in the packaging business. The firm’s blue-chip customers operate in sectors such as consumer goods and automotive manufacturing. They require sophisticated, large-scale solutions on tight timescales. Getting bigger is one way to keep costs down.

Still a buy for me

Mondi shares trade on 14 times forecast earnings with a prospective dividend yield of 3%. Although the group could see demand fall in a sustained European recession, I believe its business should be fairly durable, given that long-term demand for packaging seems likely to rise.

At current levels I rate Mondi as a long-term buy for dividend growth. In my view this is a potential buy-and-forget stock for retirement investors.

The post £1,000 to invest? CRH isn’t the only FTSE 100 dividend growth stock that could help you retire rich appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Roland Head has no position in any of the shares mentioned. 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.

But I also see a few that I think are overlooked for one reason or another, and they could provide unexpected bargains.

Progressive yields

Building materials manufacturer CRH (LSE: CRH) is one, and I suspect that’s because of its relatively low yields of only around 2.3%. Back in 2013, the company was struggling to get its dividend covered by earnings, but a strategy of growth through acquisition has since seen earnings per share soar from €0.60 that year to €2.07 last year — with forecasts suggesting that should rise to €2.23 by 2019.

A year ago, my colleague Royston Wild was upbeat about the prospects for CRH continuing nicely throughout 2017, and his optimism looks to have been well founded.

While earnings have been rising, the dividend was held steady, and it’s only just started to creep up again. Last year’s payment of €0.68 per share was covered three times by earnings, and analysts are expecting that level of cover to remain steady for the next two years.

On Thursday, CRH unveiled plans for the next stage in its progression, which will include a “new global Building Products division effective 1 January 2019, bringing together our Europe Lightside, Europe Distribution and Americas Products divisions.“

The company also aims to improve its EBITDA margin by 300 basis points by 2021, and to “have €7bn of financial capacity over the next four years.“

With a share buyback programme also underway, CRH looks in good shape to me, and I like the look of that newly-progressive dividend that’s very well covered. For me that can often be a more attractive proposition than a higher current yield.

Cash from bricks

Moving to the other end of the construction scale, I also wonder if Hammerson (LSE: HMSO) is being overlooked a little, as enthusiasm for the property market goes off the boil. 

Hammerson is a real estate investment trust (REIT), and I also suspect that might dissuade investors who are perusing the FTSE 100 for traditional companies. I think that would be a mistake, as investment trusts have some key advantages for income investors over other kinds of pooled investments, and they can smooth out dividend payments over the long term to best balance returns with the desirability of further investments.

Dividends actually fell back a little in 2016 and 2017, but we’ve been seeing a period of steady EPS growth and the annual cash rewards are expected to yield 4.8% this year and 5% next.

Hammerson, which invests in shopping centres and similar retail properties, saw its shares spike in March after it revealed a speculative approach from Klépierre, which the board rejected. In turn, Hammerson withdrew its own planned bid for Intu Properties in April, with some suggesting that major shareholders opposed the idea.

But overall its share price has held up — we’re looking at a 27% gain since the Klépierre approach was announced. Does this takeover activity suggest that stock valuations in the sector are a bit low and that there might be some bargains here for private investors?

I think so, and with Hammerson intending to focus its activity on more upmarket retail investments, I see a potential cash cow here offering solid dividends for years to come.

The post Two overlooked FTSE 100 dividend shares I’d buy and hold forever appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Alan Oscroft has no position in any of the shares mentioned. 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.

Therefore, for any investor who has a long-term time horizon, now could be an opportune moment to invest. With that in mind, here are two stocks that appear to offer a potent mix of growth and value potential for the coming years.

Growth potential

After experiencing an uncertain period in recent years, travel company TUI (LSE: TUI) appears to have a bright future. The company is expected to report a rise in its bottom line of 12% in each of the next two financial years, as consumer demand for travel opportunities within Europe is due to increase.

The company seems to be making progress with its strategy. Its recent half-year results showed that it’s delivering on its potential in areas such as cruises and in its hotels division. It’s also enjoying strong sales growth, with 59% of its summer 2018 programme sold as at the half-year stage.

Despite its improving outlook, TUI trades on a price-to-earnings growth (PEG) ratio of just 1.4. This suggests that it offers a wide margin of safety. Furthermore, it has a dividend yield of 3.7% from a payout that is covered 1.8 times by profit. This indicates that dividend growth could be high in future years and may contribute to an impressive total return.

Changing outlook

Also offering long-term growth potential within the FTSE 100 is construction and materials specialist CRH (LSE: CRH). The company has experienced mixed fortunes in recent months, with poor weather conditions hurting its top-line performance. However, with it announcing a further divestment programme that is expected to result in up to €2bn of asset sales over the medium term, it could become a leaner and more efficient business in future years.

With CRH forecast to post a fall in its bottom line of 4% this year and a rise in its earnings of 13% in the next financial year, it seems to have an improving outlook. Despite this, it trades on a PEG ratio of around 1.1, which suggests investors have factored in its near-term uncertainty.

Furthermore, the company is forecast to increase its dividends per share by 5.5% in the next financial year. Although it may only yield 2.5% in 2019, its dividend payments are covered three times by profit. This suggests that it could deliver further growth in dividends over the medium term. And with a €1bn share repurchase programme having recently been announced, its total return potential appears to be relatively impressive over the long run.

The post In your 40s? Two Footsie shares that might be worth buying appeared first on The Twelfth Magpie.

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• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens has no position in any of the shares mentioned. 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.

Indeed according to City figures, over the next two years CRH’s dividend payout to investors is expected to grow by around 10% to €0.75 per share by 2019. But to me, this looks like a conservative forecast given CRH’s management has always prioritised investor returns.

For example, the firm announced today a €1bn share buyback to return additional capital, even though trading during the first quarter has been mixed. Thanks to “prolonged winter weather conditions and the timing of Easter holidays” first quarter like-for-like sales declined 2%. Group earnings before interest tax depreciation and amortisation (EBITDA) are expected to be in line with last year’s print. 

Nevertheless, after this minor setback, management is expecting EBITDA to be ahead of last year in the second half “in the absence of any major market dislocations,” according to its trading update issued today for the three months ended 31 March.

Improving the portfolio 

CRH’s management is always on the lookout for ways to improve performance. Thanks to these efforts, earnings per share have more than doubled over the past six years. And it doesn’t look as if the enterprise is going to slow down anytime soon. 

During the first quarter, the company spent €150m on six bolt-on acquisitions and is planning €1.5bn-€2bn for further portfolio divestments over the “medium term” as the group tries to streamline its portfolio and improve overall returns. While some of this divestment cash will be returned to investors, I believe some will also be invested in new growth opportunities.

Analysts have pencilled in earnings per share growth of 24% of 2018, followed by 15% for 2019. Based on these estimates, the shares are trading at a 2019 P/E of 12.6, which looks to me to be too cheap considering CRH’s historical growth and income potential. The shares currently support a dividend yield of 2.6%.

Steady dividends 

If CRH looks interesting to me, considering the group’s dividend potential, St. James’s Place (LSE: STJ) on the other hand seems to me as if it might be worth selling.

Even though analysts are expecting the company to report earnings per share growth of 74% to 47.7p for 2018, at 23.5 times forward earnings, the shares look cheap. What’s more, the dividend payout of 48.1p per share isn’t covered by earnings per share, which leads me to conclude that the asset manager’s dividend growth might be constrained in the years ahead.

The company does have a history of increasing its dividend — at around 30% per annum for the past five years — but there’s always been more headroom available. For the past five years, the payout cover has averaged 1.5 times.

Still, management is confident that the firm’s offering will continue to attract new customers, driving earnings growth and better dividend cover. In a trading update published earlier this week, management reiterated its belief that St. James’s can continue to grow assets under management by 15% to 20% annually “during 2018 and beyond.” 

If you believe this to be an accurate reflection of the company’s potential, then perhaps the valuation isn’t too demanding.

The post One Footsie dividend growth stock I’d buy and one I’d sell today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. 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.

CRH — a multinational giant in the provision of building materials — has seen earnings swell at a compound annual growth rate of 27.7% during the past five years, and Thursday’s bubbly trading statement convinces me that earnings can continue pounding higher.

The FTSE 100 firm sprang 3% today after announcing that revenues rose 2% in 2017 to €27.6bn, with like-for-like sales rising by the same percentage. As a result, pre-tax profit at CRH boomed 16% year-on-year to €2.01bn.

Celebrating the result, chief executive Albert Manifold commented: “2017 was a year of continued profit growth for CRH. We benefitted from increases in underlying demand in the Americas and positive momentum in Europe, and with focus on performance improvement and operational delivery, margins and returns were ahead of last year in our American and European Divisions.”

He added that the ongoing economic recovery should underpin further progress in 2018.

M&A mammoth

Now City analysts are expecting earnings expansion to cool in the more immediate future, a 5% rise forecast for 2018. However, this is expected to prove a temporary slowdown as a return to double-digit growth is predicted in 2019, by 13%.

CRH has tremendous scale which puts it in the box seat to exploit improving market conditions across many global markets. The company’s enthusiastic M&A drive is expanding its footprint in key geographies and sectors. It made 31 acquisitions and three investments last year for a combined €1.9bn, up from the 24 acquisitions and investments made in 2016.

And CRH still has the monster €3.5bn takeover of US cement mammoth Ash Grove to come later this year, of course, while it is still eyeing up acquisitions elsewhere to keep profits moving skywards.

A forward P/E ratio of 14.3 times does not reflect CRH’s bright earnings outlook, in my opinion. It’s a Footsie bargain worthy of serious attention.

Medical marvel

Smith & Nephew (LSE: SN) is another Footsie share I am tipping to deliver strong and sustained profits expansion.

The Square Mile is touting a 4% earnings improvement in 2018, and an extra 7% rise is predicted for 2019.

Now current projections make the artificial limb and joint builder a tad toppy on paper, Smith & Nephew carrying a forward P/E multiple of 18.2 times. This is a small price to pay for the company’s rising might in lucrative developing markets however.

Group revenues rose 5% in 2017 to £1.28bn, the firm advised this month, driven by a 12% sales improvement from its emerging economies. This was thanks in large part to improving conditions in the Asian engine room of China, where sales rose by double-digit percentages last year.

Smith & Nephew commented in the results report: “We are well positioned to continue to drive strong growth from the emerging markets over the medium term.” And this is hardly a surprise as rising population levels and improving economic might underpin increases in healthcare budgets, and the FTSE 100 stock’s conveyor belt of cutting-edge technologies continues to win plaudits.

The post CRH plc isn’t the only FTSE 100 growth share I’d buy today appeared first on The Twelfth Magpie.

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• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?

Royston Wild has no position in any of the shares mentioned. 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.

It’s been just over 10 years since global paper and packaging group Mondi (LSE: MNDI) was first spun-off from diversified mining giant Anglo American, and in the decade that has followed, it has well and truly proven itself to be a successful and flourishing business in its own right.

The FTSE 100 group based in Addlestone, Surrey, is now fully integrated across the packaging and paper value chain – from managing forests and producing pulp, paper and compound plastics, to developing effective and innovative industrial and consumer packaging solutions.

Industry giant

The company’s products can be found in a variety of applications including hygiene components, stand-up pouches, superstrong cement bags, clever retail boxes and office paper, serving customers across a wide variety of industries across all geographical regions.

Since its demerger from Anglo American in 2007, the business has grown into an industry goliath, with annual revenues well in excess of €6bn. The company has continued to deliver high levels of growth, despite its size, with pre-tax profits more than doubling from €368m to €843m in the last five years alone.

Quality blue chip

Investors have no doubt been impressed with the group’s performance over the years, sending the share price rocketing from lows of 121p in the aftermath of the last recession to all-time highs of 2,130p in the latter part of 2017.

However, I believe the recent share price weakness could signal a buying opportunity for long-term growth-focused investors to buy this quality blue-chip that’s currently trading on a relatively modest earnings multiple of 12.

Hurricane activity

Another blue-chip that has thrived since the financial crisis is international building materials group CRH (LSE: CRH). The Dublin-based firm has enjoyed a pretty good year so far despite the current economic uncertainties, with cumulative sales of €20.7m in the first nine months, representing a 2% increase on the previous year on a like-for-like basis.

The group has benefitted from continued underlying growth in the Americas, despite the adverse impact of severe weather and in particular hurricane activity in the region during 2017. But while momentum remains positive in Europe, market conditions in Asia continue to be highly competitive.

The only way is up

Still, CRH remains well-positioned to benefit from President Trump’s push for increased spending on the US’s creaking infrastructure, and this should continue to be a big driver of growth in the coming years. With full-year results due in a just a few weeks, management expects full-year earnings (before interest, tax, depreciation and amortisation) to be in excess of €3.2bn for 2017, a €70m improvement on the previous year.

The shares have struggled to find direction over the past 12 months or so, and yet to me they look significantly undervalued trading on a forward earnings multiple of 13.8 for the current year to December. I reckon that if those annual results live up to expectations, from hereon in, the recently battered share price should start to rise.

The post 2 top blue-chip stocks to buy now appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?

Bilaal Mohamed has no position in any shares mentioned. 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.

City analysts are expecting annual profits expansion to cool from recent years, although this is expected to still clock in at 9% for 2017. Those hoping for the pace to hasten will not have to wait long, either, an 18% improvement being forecast for next year. And current projections leave the FTSE 100 star dealing on a relatively-cheap forward P/E ratio of 13.7 times.

Meanwhile, CRH’s recently resurrected progressive dividend policy is predicted to push the dividend to 67.5 euro cents per share in 2017, up from 65 cents last year and yielding a chunky 3%. What’s more, an anticipated 70.8-cent payment that is being forecast for 2018 nudges the yield to 3.2%.

In a promising sign for future profits generation, the company has considerable financial firepower to continue its aggressive acquisition strategy across the US and Europe, while the benefits of CRH’s busy M&A drive in 2017 are expected to begin to filter through next year.

In addition to this, pricing is expected to begin improving across these established markets from 2018 onwards, in a further boon to CRH’s bottom line. And beyond this, promising economic indicators and should continue to drive infrastructure spend and thus keep the firm’s products well bought.

Looking good

Booming global demand for Ted Baker’s (LSE: TED) fashions has caused earnings to jump by double-digit percentages over the past five years (and at a compound annual growth rate of 15.1%). I am convinced the firm, like CRH, should prove a happy pick for growth seekers.

City analysts have pencilled in rises of 12% in the year to January 2018 and 13% in fiscal 2019 alone. And as a consequence the designer trades on a forward P/E ratio of 17.7 times, excellent value in my opinion given the FTSE 250 star’s brilliant sales momentum.

But the prospect of stunning earnings growth is not the only reason to pile into Ted Baker today — indeed, the rate at which the company continues to hike dividends should attract the gaze of income seekers. The business has doubled the full-year payout during the last five fiscal years.

So the Square Mile is predicting that last year’s 53.6p per share dividend will surge to 60.4p in fiscal 2018, and again to 68.9p in the following period. These sunny projections yield 2.4% and 2.7% respectively.

I am confident that Ted Baker’s chic lines can allow it to traverse the impact of broader industry pressure, a belief underlined by a recent market update in which, despite the firm warnings of “challenging trading conditions across some of our global markets,” it still managed to grind out a 7.3% year-on-year revenues improvement during the three months to November 11th.

And with Ted Baker steadily expanding to capitalise on strong pent-up demand (it opened stores and concessions in the UK, mainland Europe and across North America in the period), the business is setting itself up for solid earnings growth in the years ahead.

The post Two growth stocks I’d buy right now appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Ted Baker plc. 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.