3 Stocks That Could Surge By 25%+ Next Year! GlaxoSmithKline plc, Sports Direct International Plc And Banco Santander SA

These 3 stocks could be well-worth owning in 2015: GlaxoSmithKline plc (LON: GSK), Sports Direct International Plc (LON: SPD) and Banco Santander SA (LON: BNC)

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GlaxoSmithKline

Sentiment in GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) is currently at a low ebb. Evidence of this can be seen in the share price performance of the pharmaceutical major during the course of the last year, with it posting a decline of around 16%. A key reason for this is concern surrounding the impact of generic drugs on GlaxoSmithKline’s top and bottom lines, as well as allegations of bribery that have persisted for some time.

While there has been little evidence of a shift in sentiment in recent months, further uncertainty in the wider market could change investor perceptions of GlaxoSmithKline. For instance, its superb defensive merits (including a yield of 6.1%, a beta of 0.9 and revenue that is less dependent upon the economic cycle than is the case for other companies) could be hugely beneficial to investors – especially if 2015 sees further uncertainty come to the fore regarding the global macro outlook.

And, with GlaxoSmithKline trading on a price to earnings (P/E) ratio of 14.4, a gain of 25% seems very possible, since this would equate to the company still trading at a sizeable discount to sector peer Shire, which has a rating of 19.8.

Sports Direct

Despite its share price falling by 8% year-to-date, Sports Direct (LSE: SPD) continues to perform well as a business. This was highlighted in its most recent update, which showed that the company is on track to meet guidance of a 20% increase in earnings in the current year, and a further 15% next year.

Such a strong rate of growth may continue over the medium term, as Sports Direct expands into Europe and diversifies its offering in the UK via fitness centres, for example. Despite this potential, its shares continue to offer excellent value for money, with them trading on a price to earnings growth (PEG) ratio of around 1.

And, with the FTSE 100 having a PEG ratio of around 2 at the present time, it’s clear that Sports Direct’s share price could rise by 25%+ in 2015, simply through an uplift to its current rating. In fact, a P/E ratio of 22.1 would be sufficient to achieve this, which would still equate to a relatively appealing PEG ratio of 1.3.

Santander

2014 has been somewhat disappointing for investors in Santander (LSE: BNC) (NYSE: SAN.US), with its shares having fallen by 3% since the turn of the year. Still, the bank could have a much better 2015, with its bottom line being forecast to grow by 19% next year. If met, this would clearly be a stunning rate of growth and cause an increase in Santander’s valuation.

That’s because Santander currently trades on a P/E ratio of just 13.3, which is below the FTSE 100’s rating of 14.3. In fact, were Santander to trade on the same P/E ratio as the FTSE 100, it would equate to a share price that is around 8% higher than the level at which it currently trades. This, plus the forecast earnings growth already mentioned, would be enough to boost Santander’s share price by over 25% next year.

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 GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline and Sports Direct International. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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