Looking ahead, the company appears to have significant turnaround potential. Alongside a smaller company which reported positive results on Thursday, it could be worth buying for the long run.

Changing outlook

Since ITV is a cyclical stock, it is relatively sensitive to changes in the macroeconomic outlook for the UK. Following the EU referendum, consumer and business confidence have come under significant pressure. This has led to downgrades for the UK economy’s growth rate, which suggests that companies that are reliant on the UK for their sales could experience a difficult period.

The company has also seen its CEO Adam Crozier depart. Having performed well in his role in recent years and having been a key part of transforming the company’s operational and financial performance, it is perhaps understandable that investors are cautious about his replacement, Carolyn McCall. However, with a solid track record and plans for a new growth strategy, the market may be underestimating her potential impact over the medium term.

Investment potential

With ITV’s share price having fallen in the last year, it now trades on a price-to-earnings (P/E) ratio of around 12. This suggests that it could offer a wide margin of safety. Of course, its forecast fall in earnings of 4% this year and lacklustre growth outlook of just 1% in 2019 indicate that the stock could take time to deliver improved performance.

However, with a 4.8% dividend yield that is covered 1.9 times by profit, the total return potential of the stock could be impressive. With a favourable interest rate environment set to remain in the UK and an updated strategy having the potential to catalyse its financial performance, further underperformance of the FTSE 100 may not be the norm for ITV over the medium term.

Growth potential

Also offering the potential to generate high total returns relative to the FTSE is marketing company for the gaming sector Veltyco (LSE: VLTY). It reported encouraging full-year results on Thursday which suggest that its current valuation may be too low.

The company delivered revenue growth of 165%, with sales rising from €6.1m in 2017 to €16.2m in 2018. This was boosted by acquisitions, with the company continuing to be active in the M&A space following the period end. And with its operating EBITDA (earnings before interest, tax, depreciation and amortisation) increasing by 260% to €8.1m during the year, it seems to be in a strong position to generate further growth in the long run.

Despite this, Veltyco trades on a price-to-earnings growth (PEG) ratio of 1.9 at the present time. Although it is a relatively small stock which is risky due in part to its ambitious growth plans, its return potential could be impressive. As such, for less risk-averse investors, it could be worth a closer look for the long run.

The post The ITV share price: why is it underperforming the FTSE 100? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.

An improving outlook

One such company is housebuilder Taylor Wimpey (LSE: TW). It has experienced an uncertain period since the EU referendum, with its share price being highly volatile. Investors seem to be unsure about the prospects for the wider industry than they were a few years ago, with there being the potential for a decline in demand for new housing as the effects of Brexit on the economy continue to be felt.

However, the reality is that there is a major lack of supply of new homes. Even if the UK’s population growth ground to a halt, it would still take many years for the supply deficit of new homes to be reduced to zero. And with population growth expected to remain at current levels in future years, the prospects for the housing market seem positive. This may lead to improved financial performance for housebuilders.

A low valuation

Despite a positive outlook for the housing market, Taylor Wimpey continues to trade on a relatively low valuation. It has a price-to-earnings (P/E) ratio of around 8.8 using 2018’s forecast earnings figure. With its bottom line due to rise by 4% next year, it could trade on an even more appealing valuation in future. This could prompt investors to become more attracted to its long-term growth story.

While the outlook for the housebuilding market may be uncertain, the company has made improvements to its balance sheet in recent years. They should reduce its future risks, while a large land portfolio means the company has an entrenched position in what may prove to be a strong growth market in the long run.

Growth at a reasonable price

Also offering a low valuation and improving profit potential is online marketing company Veltyco (LSE: VLTY). It released a positive trading update on Monday which showed that trading in December continued to be strong. In fact, it now expects its results for the 2017 financial year to be significantly ahead of market expectations. Net revenues are now due to be in excess of €14.5m, with EBITDA (earnings before interest, tax, depreciation and amortisation) to be above €8m.

With Veltyco trading on a price-to-earnings growth (PEG) ratio of 1.7, the company seems to offer growth at a reasonable price. Its shares are already up over 10% following its trading update, and it would be unsurprising for them to continue to make gains in the near term. With its trading conditions being generally positive, the company seems to be in a strong position to deliver above average earnings growth in future years. As such, it could prove to be a sound investment.

The post Taylor Wimpey plc isn’t the only bargain growth stock I’d buy today appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Taylor WImpey. 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.

In turn, this could mean that the company is able to command a higher valuation as investors begin to price-in greater earnings power. As such, now could be a perfect time to buy the oil major while it still trades at a relatively low price.

Improving outlook

After a number of years of significant challenges, it looks as though BP could finally be turning a corner. The company is forecast to return to profitability in the current year after two years of losses. This seems to have improved investor sentiment in the firm, with its stock price rising by over 11% during the last three months.

This situation could continue over the medium term. It is forecast to record a rise in its bottom line of 34% in the next financial year as investment in its asset base and improved prospects for the oil price are expected to continue. Despite this, BP trades on a price-to-earnings growth (PEG) ratio of just 0.5. This suggests that it may be undervalued at the present time.

With the supply surplus of oil expected to be kept in check to at least some degree by rising demand and the potential for further supply restrictions from OPEC, the outlook for the oil price may be positive. This could mean that now is the right time to buy BP ahead of what may be a significantly improved financial period for the business.

Improving performance

Also offering the prospect of growth potential at a reasonable price is Veltyco (LSE: VLTY). The online marketing company for the gaming industry released a trading update on Tuesday which showed that its strategy is performing well. In fact, trading since its interim results were released in September has been strong. This means that the company now expects revenue and EBITDA (earnings before interest, tax, depreciation and amortisation) to be significantly ahead of market expectations for the current year.

Since the interim results, the company has continued to grow. The Bet90 brand has launched its new website which has performed well. Bet90 is also expected to enter the South American market and this could positively impact on the overall performance of Veltyco.

Looking ahead, it is forecast to post a rise in its bottom line of 6% in the next financial year. This puts it on a PEG ratio of only 1.6, which suggests that it could offer excellent value for money at the present time. Certainly, it is a relatively small company which could remain volatile over the short run. However, with its shares rising by 16% following Tuesday’s update, investor sentiment appears to be strong and this could help to push its share price higher.

The post Why BP plc could make you brilliantly rich appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in BP. The Motley Fool UK has recommended BP. 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.