The FTSE 100’s Hottest Growth Stocks: ITV plc

Royston Wild explains why ITV plc (LON: ITV) is an exceptional earnings selection.

| 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.

Today I am outlining why ITV (LSE: ITV) could be considered a terrific stock for growth hunters.

Revenues on the charge

Despite the glut of channels currently on offer to British television audiences, not to mention the huge impact of the internet in dragging viewers away from the box, broadcasting giant ITV has managed to keep bums on seats and consequently keep the revenues streaming in.itv

The business saw total external turnover rise 7% during January-June, to £1.2bn, it announced in July. And crucially ITV is successfully cottoning onto changing consumer preferences towards internet and ‘on demand’ viewing, and saw revenues from online, interactive and pay channels surge 20% during the period to £67m.

Should you invest £1,000 in ITV right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if ITV made the list?

See the 6 stocks

Meanwhile the company’s ITV Studios division — Britain’s largest production company and producer of hits shows including Downton Abbey and Coronation Street — saw revenues edge 2% higher in the first half to £402m. And the firm’s aim to crack new geographic markets through acquisitions was boosted by its purchase of Leftfield Entertainment in May, enhancing its exposure to the high-growth reality TV sub-sector in the US.

Earnings growth set to rumble on

ITV’s Transformation plan launched in mid-2010 — which includes creating more programme for international markets, and creating a worldwide pay and distribution service — is clearly working wonders, and earnings have rocketed higher at a compound annual growth rate of 20.5% since then.

And the City’s number crunchers expect the programme to continue delivering the goods, and ITV is anticipated to generate earnings growth of 16% in 2014, to 13p per share. A further 11% rise is predicted for next year to 14.5p.

These figures leave the company changing hands on a P/E ratio of 16.6 times prospective earnings for this year, and which falls to 15 for 2015, smack bang on the yardstick which is generally regarded as decent value for money.

While it is true that these numbers are hardly eye-popping in pure value terms, I believe that investors should pay closer attention to ITV’s price to earnings to growth (PEG) figures for these years. Indeed, a readout of 1 for 2014 is in line with the standard which represents terrific bang for one’s buck, and which remains at cheap levels around 1.4 for 2015.

Should you buy ITV shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim 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.

Royston Wild has no position in any shares mentioned. 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.

More on Investing Articles

Investing Articles

4 REITs Fools own for passive income

REITs often have higher-than-average dividend yields compared to other stocks, making them a solid choice to consider for passive income…

Read more »

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »