I have long sung the praises of household goods leviathan Unilever (LSE: ULVR), its rich history of generating strong earnings growth, whatever the weather, making it one of the ultimate ‘peace of mind’ shares out there.
But the Marmite maker and Persil producer isn’t the only stock that could deliver stonking returns long into the future. Indeed, Gama Aviation (LSE: GMAA) is another share I reckon you might be able to retire on.
Plane brilliance
The business aviation service provider has been a stellar performer in the year to date, its share price gaining 82% since the beginning of 2017 and soaring to 16-month highs above 250p just today, following the release of half-year numbers.
The Farnborough-based company advised that revenues detonated 45% between January and June, to $291m, a result that powered underlying pre-tax profit 40% higher to $7m.
Chief executive Marwan Khalek said: “The first half of 2017 has seen the group maintain the positive momentum generated through last year to deliver a good performance in line with our expectations… in all divisions and all regions we achieved strong revenue growth and encouraging improved margin performance.”
The company saw US Air revenue rise 74% in the six-month period, and it advised that “the integration of the BBA aircraft management business into the US Air division is progressing well and benefitting from a buoyant US market.”
Gama merged its aircraft management and charter business in the US with that of BBA Aviation back in January to create the country’s biggest aircraft management firm, a move that created significant cost benefits and expanded its global footprint.
And at US Ground, Gama saw revenues shoot 19% higher in January-June thanks to the impact of new base openings last year and fresh contract wins.
A strong North American marketplace was not the only cause to celebrate, however, with Gama noting that at Europe Air, “operational efficiency initiatives completed in 2016 have produced strong improvements in gross profit and EBITDA margins.” The flying ace also reported “modest revenue growth and improved profitability” at its Europe Ground.
And elsewhere, Gama advised that Middle East Air and Ground had showed “encouraging growth” in the first half.
Those seeking an immediate earnings explosion may well be disappointed — Gama is predicted to endure a 31% earnings drop in 2017. However, I remain convinced that next year’s predicted 9% bottom-line rebound should start a run of chunky profits advances.
Despite hitting fresh share price summits on Wednesday, Gama boasts a forward P/E ratio of 10.2 times. And I reckon this is unmissable value given the company’s improving position in a growing market, helped by the impact of recent M&A activity.
Global goliath
As I previously said, I am also confident that Unilever should deliver terrific earnings growth, and my view is shared by the number crunchers — bottom-line rises of 18% and 10% are chalked in for 2017 and 2018 respectively.
Few companies can boast the formidable brand power and broad geographic footprint of Unilever. And these should continue unlocking exceptional shareholder returns, in my opinion. I reckon the FTSE 100 giant is well worth its premium forward P/E ratio of 22.6 times.
