Today I am examining whether investors should plough the cash in three of the FTSE’s headline makers.
MJ Gleeson
Despite releasing a perky trading update, MJ Gleeson (LSE: GLE) has failed to ignite the market in end-of-week business and was last dealing 2.8% lower. However, I believe that this represents nothing more than profit-booking after the housebuilder’s terrific share price ascent in recent months — MJ Gleeson has gained 27% since the start of March alone.
The company’s Gleeson Homes division confirmed the uptrend washing across the industry, with home sales during the 12 months concluding June clocking in at 751, up an astonishing 34% from fiscal 2014 levels. And with MJ Gleeson’s land bank of owned and conditionally-purchased plots up 63% from last year, I believe the firm should continue to enjoy terrific sales growth well into the future.
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This view is shared by the City, and MJ Gleeson is anticipated to follow an anticipated 60% earnings advance in 2015 with a 24% rise in 2016, resulting in very decent P/E ratios of 16.3 times and 13.1 times for these years. Furthermore, this brilliant earnings outlook is anticipated to underpin further growth in the dividend — last year’s 6p per share payment is expected to rise to 8.5p in 2015 and again to 10.1p in the current period, yielding a handy 1.8% and 2.3% respectively.
British Polythene Industries
Similarly, wider macroeconomic fears over the unfolding Greek financial crisis has overshadowed a positive release from British Polythene Industries (LSE: BPI), and shares have failed to react at all with the stock last flat from Thursday’s close. The Greenock business announced that volumes during January-May were ahead of those reported during the corresponding 2015 period, even though high polymer prices hampered margin performance.
Still, British Polythene Industries advised that raw material prices look set to start descending, while its North American markets are also ratcheting through the gears. It is true that the impact of strong sterling against the euro is impacting profitability from its European marketplaces, but I believe the plastics play provides irresistible value at current levels — expectations of a slight earnings drop in 2015 results in a P/E ratio of just 9.5 times, while a predicted 5% uptick in 2016 drives this to 9 times.
And British Polythene Industries’ progressive dividend policy sweetens the investment case, in my opinion. A forecast reward of 16.7p per share for this year compares with 16p in 2014, and yields a respectable 2.5%. And the yield creeps to 2.6% for 2016 due to predictions of a 17.5p payout.
Vodafone Group
It comes as no surprise that telecoms leviathan Vodafone (LSE: VOD) (NASDAQ: VOD.US) is one of the FTSE 100’s biggest casualties in Friday’s session, with the enduring eurozone crisis casting fresh doubts over its revenues credentials on the continent. Indeed, last year’s takeover of Greek broadband provider Ono has done the business no favours at the current time, and the company was last dealing 1.8% lower from yesterday’s close.
And for many, Vodafone’s elevated price may be considered a risk too far given its massive reliance upon Europe. Indeed, P/E multiples of 45.3 times and 37.8 times for the years concluding March 2016 and 2017 correspondingly sail well above the benchmark of 15 times that represents decent value. But for more optimistic investors, signs of resilient recovery on the continent, combined with tearaway demand in Asia, makes Vodafone an irresistible long-term growth pick — the City expects a 1% bottom line improvement this year to accelerate to 15% in 2017.
On top of this, Vodafone’s ability to chuck up plenty of cash also makes it one of the best dividend picks money can buy. Last year’s dividend of 11.22p per share is predicted to remain stable around 11.7p per share through to the close of next year, producing a mammoth yield of 4.9%.
