With the global economy continuing to improve, there are a number of stocks offering growth at a very reasonable price. Certainly, the Eurozone is not ‘out of the woods’ just yet, with further problems regarding the repayment of debts and anaemic growth rate of the single-currency region likely to come to the fore in the years ahead. However, with interest rates set to move higher in the UK and across the Pond in the next six months, things are clearly brighter than they have been in a number of years for the wider economic outlook.
As a result, stocks markets across the globe (China excepted) have soared, with all-time highs being reached. One company that is benefitting from this is wealth management business, Brooks Macdonald (LSE: BRK). It has seen its bottom line rise at an annualised rate of 22.7% during the last four years, with the bull market during that period meaning that its fee income and profitability has soared. And, looking ahead, further growth it set to be delivered, with Brooks Macdonald expected to post earnings growth of 18% next year. This, when combined with its price to earnings (P/E) ratio of 20.6, equates to a price to earnings growth (PEG) ratio of just 1.1, which indicates that its valuation is very appealing at the present time.
Similarly, Virgin Money (LSE: VM) has benefitted from an improving UK economy, with its loan book increasing in size and its brand becoming better known and more diversified in recent years. Looking ahead, its growth appears to be on the up, with Virgin Money’s bottom line expected to rise by as much as 47% next year. Certainly, an interest rate rise later this year may hurt demand for new loans, but with Virgin Money having a PEG ratio of just 0.3, it appears to have a sufficiently wide margin of safety to take this into account. And, with dividends expected to increase by 90% in 2016, Virgin Money could quickly become a strong income play, too.
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Of course, neither Brooks Macdonald nor Virgin Money offer the size and scale of Santander (LSE: BNC) (NYSE: SAN). It has endured a challenging period, with the Eurozone’s troubles weighing on its financial outlook. However, it now has a much improved capitalisation ratio following its 2014 placing and is committed to maintaining the regional diversity that remains a major selling point for potential investors in the bank.
Looking ahead, Santander is set to continue to deliver double-digit earnings growth and, as such, it seems to be worthy of a considerably higher rating than the P/E ratio of 12.6 on which it currently trades. And, with Santander set to increase dividends by around 13% next year, it could become an even more appealing income stock over the medium to long term, too, with its yield of 3% likely to rise in future.
