As such, further outperformance of the FTSE 100 could be ahead over the long run. Alongside another stock that reported encouraging results on Monday, Lloyds could be worth buying right now.

Improving prospects

The stock in question is supplier of ventilation products, Volution (LSE: FAN). Its interim results showed a rise in revenue of 16.3% to £114.8m, while adjusted operating profit moved 10.7% higher to £20.2m. Encouragingly, the four acquisitions that were completed in the previous year are integrating and performing well. Those acquisitions have enhanced the company’s business model, while also providing additional diversification.

The company’s performance in the UK has been relatively strong. Despite operational challenges at its Reading facility, it has achieved improved production levels that have been sustained into the second half of the year. It has also experienced good traction with its new Xenion range of decentralised heat recovery ventilation in Germany.

With Volution forecast to deliver net profit growth of 10% in the current year, it seems to have a bright future. A price-to-earnings growth (PEG) ratio of 1.3 suggests that it may have a wide margin of safety and could deliver improving share price performance.

Low valuation

Also offering a low valuation is Lloyds. Even though its shares have made strong gains since the start of the year, it has a price-to-earnings (P/E) ratio of around 8.5. This suggests that investors continue to price in the risks facing the bank, in terms of an uncertain outlook for the UK economy.

While that is perhaps to be expected given the political and economic challenges facing the UK, recent quarterly updates from Lloyds have generally been positive. Despite difficult trading conditions, it has been able to further reduce costs and improve its income prospects. Like all UK-focused banks, it has endured a prolonged period of low interest rates, which means that net interest margins across the sector have been suppressed. Therefore, as interest rates move higher over the coming years, there could be improving profitability ahead that has not yet been priced in by the stock market.

As ever, there are risks ahead for the stock. Brexit could have a negative impact on the economy, for example. There may also be global challenges over the coming months. But from a risk/reward perspective, Lloyds seems to be highly appealing – even after its recent stock price surge. Therefore, now could be a good time to buy it, with its growth strategy seemingly intact and it having a wide margin of safety at a time when the FTSE 100 is trading within 10% of its all-time high.

The post FTSE 100-member Lloyds’ share price is up 25% in 2019. Here’s what I’d do now appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking 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.

Of course, there are many other shares across the FTSE All-Share which could provide wide margins of safety. In fact, reporting on Friday was a smaller company that could deliver impressive growth at a reasonable price.

Solid performance

The company in question is ventilation products supplier Volution (LSE: FAN). The stock released a trading update for the financial year to 31 July on Friday which showed that its results will be in line with expectations. Revenue growth during the period was 11.3%, rising to £206 million. This was made up of organic growth of 2.9%, with 8.4% of total growth being as a result of new acquisitions.

The company’s organic growth benefited from a stronger performance in the UK. Notably, Residential New Build recorded growth of 13.3%. And despite disruption in its Private Residential RMI segment, it was still able to post growth of 3.3%. International performance was strong, with revenue in the Nordics rising by 19.2% and Central Europe revenue increasing by 3.7%.

Looking ahead, Volution is expected to report a rise in earnings of 10% in the current year. With a price-to-earnings growth (PEG) ratio of 1.4, this suggests that it offers good value for money at the present time. Therefore, while the prospects for the UK economy remain uncertain, its growth potential seems to be high.

Growing opportunity

easyJet’s earnings growth potential also seems to be high, and this could help its share price to beat the FTSE 100. The company’s bottom line is expected to rise by 44% in the current year, followed by additional growth of 18% next year. This is despite potential risks from a rising fuel price, as well as weak consumer confidence that has been present in the UK in recent months. And with it trading on a PEG ratio of 0.7, it seems to be cheap on a relative basis.

With easyJet set to outperform sector peers regarding its financial performance, its share price could do likewise. The company has been growing passenger numbers, as well as becoming more efficient. Its business offering has proved popular, while M&A activity could prove to be an added catalyst for its top and bottom lines.

easyJet may also become an increasingly popular income share for FTSE 100 investors. The company’s dividend is expected to rise by 26% next year so that it yields around 4.3%. This would make it a higher-yielding stock than a wide range of FTSE 100 shares. And with dividends due to be covered twice by profit, they seem to be highly sustainable. As such, the total return potential of the stock seems to be high.

The post Why easyJet is a FTSE 100 stock that still looks seriously cheap appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of easyJet. 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.

However, there could be more to the company than simply a high dividend yield. Furthermore, it’s not the only income stock which could be worth a closer look at the present time. Reporting on Monday was a dividend growth stock which could offer high returns.

Improving performance

The company in question is ventilation products supplier Volution (LSE: FAN). It released a positive set of interim results which showed a rise in revenue of 11.6%. Organic revenue growth was 6.3%, while inorganic revenue growth was 5.3%. This boosted its adjusted operating profit by 6.7% to £18.3m. Operating margin decreased by 90 basis points, as expected, due to the impact of acquired businesses which have lower margins than the rest of the company.

Volution also announced the acquisition of Simx Limited. It is a market-leading residential ventilation products supplier in New Zealand for both new and refurbishment applications. This could help to boost the company’s financial performance, with it expecting to make further progress in future periods.

Since the company’s bottom line is due to rise by 6% in the current year and by a further 7% next year, there seems to be scope for an inflation-beating rise in dividends. Although it has a dividend yield of just 2.2% right now, shareholder payouts are covered 3.3 times by profit. This suggests that they could increase at a much faster pace than profit over the medium term without hurting the financial strength of the business.

Turnaround potential

Clearly, Centrica’s dividend yield has more appeal at first glance than almost any other stock in the FTSE 350. However, the company continues to experience a difficult period as it seeks to fundamentally change its business model. Its strategy may be sound, with it seeking to generate major cost savings and transition towards a more efficient business in the long run. However, uncertainty regarding regulatory change has weighed on its performance and this has caused investor sentiment to weaken.

Today, Centrica trades on a price-to-earnings (P/E) ratio of around 10. Even though it has a challenging outlook, this suggests that investors may have fully factored-in the problems it faces as political risk for the domestic energy supply sector remains high. In fact, the stock appears to have a wide margin of safety that could equate to strong growth over the medium term – especially since it is expected to record a rise in earnings of 7% in the current year.

Certainly, its stock price could be volatile and its prospects of dividend growth may be limited. But its total return potential still seem to be impressive.

The post Centrica plc isn’t the only bargain dividend stock I’d buy with £2,000 appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in Centrica. 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.