3 Stocks With 20%+ Return Potential? CPP Group Plc, National Grid plc, Anglo American plc

Are these 3 stocks capable of rising by over 20%? CPP Group Plc (LON: CPP), National Grid plc (LON: NG), Anglo American plc (LON: AAL)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As all investors know, having a diverse mix of companies within a portfolio can make a huge difference to long term returns. That’s at least partly because it allows stronger performing stocks to pick up the slack from others which are disappointing, with returns being a lot less volatile than if an investor were to focus on a small number of stocks.

Clearly, the benefits of diversifying outside of the mining sector have been all too evident of late, with the likes of Anglo American (LSE: AAL) posting severe share price falls. In its case, a slump of 53% has been recorded in the last year alone with regard to its valuation but, looking ahead, it could easily make up such a large fall.

A key reason for this is its strategy of restructuring the business and, more specifically, selling off assets which offer relatively high risk and relatively low returns. This should help to rebalance the company’s asset base towards more profitable areas, and allow efficiencies to be more easily generated. And, while Anglo American is due to record a fall in its net profit of 49% this year and 19% next year, it remains highly profitable, yields 6.7% and trades on a price to book value (P/B) ratio of only 0.4. As such, gains of 20% are very achievable over the medium term.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Similarly, National Grid (LSE: NG) could see its share price rise by a fifth moving forward. Certainly, investor sentiment may be held back somewhat due to planned interest rate rises which could hurt investor sentiment in highly indebted companies such as National Grid. But, realistically, monetary policy is unlikely to tighten at a brisk pace – especially since the global economy continues to battle with deflation.

In fact, the outlook for National Grid could become more positive the worse the macroeconomic outlook becomes. That’s because it continues to be one of the most appealing defensive stocks in the FTSE 100 and, with it trading on a price to earnings (P/E) ratio of just 15.8, there is upward rerating potential at a time when many of its utility peers have much higher ratings. And, of course, National Grid’s beta of 0.78 means that in the short run its shares should offer a less volatile shareholder experience, too.

Meanwhile, credit card insurer CPP Group (LSE: CPP) continues its stunning performance since the turn of the year, with the company positing a double-digit gain today and making it a rise of 230% since the turn of the year. A key reason for this has been the company upgrading its guidance for 2016, with its half year results showing that encouraging progress has been made. And, with its transformation plan seemingly on-track, it would be unsurprising for its improved financial performance to continue over the medium term.

Certainly, it could be argued that profit taking will hold the company’s share price back after such strong gains but, after a successful debt restructuring and with CPP having a clear growth strategy, investor sentiment could warm sufficiently to add another 20% to its valuation.

Amazing Nerd Stock smashes FTSE with 1,346% gains

What makes this company so extraordinary?

It has a cult-like following of nerdy fans who tend to spend lots of money…

potentially handing investors market-beating gains in any economy.

Though past performance does not guarantee future results, last year, this amazing company saw:

  • Double-digit revenue growth - to a total £470,800,000
  • Profits explode 46%
  • Insiders buying a monster £492,000 of shares

…Setting investors up for - what could be - another decade of spectacular returns.

Want to consider joining them?

Then grab this special report: ‘One Top Growth Stock from The Motley Fool’ which includes both the risks and opportunities.

Secure your FREE copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Anglo American and National Grid. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

5 stocks for trying to build wealth after 50

Inflation recently hit 40-year highs… the ‘cost of living crisis’ rumbles on… the prospect of a new Cold War with Russia and China looms large, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

See the 5 stocks

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »