Royal Bank of Scotland Group
Sentiment toward Royal Bank of Scotland Group (LSE: RBS) (NYSE: RBS.US) has improved sharply in recent weeks. It has become less likely that the bank will be broken up, and the company has announced a new chief executive. The UK economy is on the mend and RBS has just posted its second successive quarterly profit.
For the last five years, investors have been working the possibility of collapse into the RBS share price. There are signs that this has now passed, and the market is beginning to value RBS as a normal company.
The bank is profitable and well capitalised. Its long-term future now looks assured. Best of all, the shares are cheap today at a 40% discount to book value. That makes them a great candidate for a long-term investment.
Unilever
Unilever (LSE: ULVR) (NYSE: UL.US) is one of the strongest of all FTSE 100 companies. As a provider of leading consumer brands, Unilever has a foothold in almost every food cupboard in the country.
These brands bring pricing power and profits. Sainsbury’s cannot be without Hellmann’s. ASDA must sell Flora. Trying to compete with Unilever would involve such high marketing costs that many rivals hardly bother.
Two years of earnings and dividend growth are forecast this year and next. That puts the shares on a 2014 P/E of 18.0, with a prospective dividend yield of 3.5%.
Unilever shares may have little prospect of any sharp rise soon, but its long-term future looks as nailed on as ever.
William Hill
Shares in bookmaker William Hill (LSE: WMH) are up 32% this year as the company has acquired a dominant position in Australia and taken full control of its online operations.
As mobile technology becomes more popular, the required effort from a punter to place a bet is to reach into his pocket. Mobile technology encourages more frequent and impulsive betting — the result is a better margin for bookies like William Hill.
Bookmakers have long been famously profitable businesses. There is real potential for growth in emerging markets and regulations are being loosened worldwide. William Hill looks set to be a major beneficiary.
The shares currently trade on a 2014 P/E of 14.5, with a forecast yield of 2.8%.
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> David owns shares in Royal Bank of Scotland but none of the other companies mentioned. The Motley Fool has recommended shares in Unilever.