Shares in Thomas Cook (LSE: TCG) have risen by up to 5% today after the company released an encouraging update. Summer holiday sales have been in-line with previous guidance and it has made a positive start to the important winter season. Therefore, it remains on-track to meet expectations for the full-year.
This means that Thomas Cook is forecast to post a fall in earnings of 28% for the current year which, while disappointing, is due to be more than offset by growth of 45% which is being pencilled in for next year. Clearly, Thomas Cook remains a highly cyclical stock and its forecasts could change in the intervening period, but with its Northern European business making impressive progress according to today’s trading update and a third of its winter season already sold, it appears to be moving in the right direction.
Of course, Thomas Cook offers a relatively wide margin of safety at the present time. For example, it trades on a price to earnings growth (PEG) ratio of just 0.2, which indicates that its shares could be set to continue the rise which has seen them increase in value seven-fold in the last three years.
Similarly, Sky (LSE: SKY) also has the scope to post stunning capital gains. It is becoming a business with a much wider economic moat thanks to a focus on differentiating its product from pay-tv competitors. For example, Sky has invested in channels only available through a subscription to its services and is also becoming more heavily involved in production, too.
Looking ahead, Sky is expected to post a rise in its earnings of 14% in the current year. This puts it on a PEG ratio of just 1.2 and, with expansion into new product lines such as mobile expected to take place over the medium term, it appears to have sufficient positive catalysts to push its share price higher.
Meanwhile, Legal & General (LSE: LGEN) also has very impressive growth prospects. Its bottom line is set to increase by 15% this year, followed by further growth of 7% next year. These figures would come after three years of double-digit growth and show that the company is making encouraging progress. And, with its shares trading on a PEG ratio of only 0.9, they offer excellent value for money alongside a yield of 5.5%, which makes Legal & General the ideal income, growth and value play.
Of course, Centrica (LSE: CNA) may be viewed as a company with relatively poor growth prospects owing to its exposure to the slow-moving domestic energy supply market. However, the company’s bottom line could surprise on the upside if it can deliver on its ambitious cost savings and become leaner, more efficient and more profitable as a result of the sale of its oil and gas operations.
So, while Centrica may not be the most exciting of companies, its financial performance could be very strong in the next few years. For this reason, plus a price to earnings (P/E) ratio of just 12.4, Centrica appears to be a very sound buy at the present time.
