Right now, Barclays (LSE: BARC) (NYSE: BCS.US), Taylor Wimpey (LSE: TW) and Ashtead (LSE: AHT) are among the favoured FTSE 100 stocks of professional analysts.
Ashtead
Ashtead rents construction and industrial equipment, and has national networks in the UK and US. The company reported record profits in its recent nine-month results, and earnings per share (EPS) up 35% on the same period last year. Management said: “We now anticipate a full year result ahead of our previous expectations and the Board looks forward to the medium term with continued confidence.”
City analysts have long been bullish on Ashtead, and the results prompted price target upgrades across the board. Also, Beaufort Securities initiated coverage of the company saying: “Ashtead’s medium to long term prospects look attractive. We assign a Buy rating”.
Analysts at Jefferies said: “Ashtead remains in early innings of multi-year period of supernormal growth”. Barclays reckons the company can do compound annual EPS growth of 24% through the next three years. Ashtead trades on a fairly high current-year price-to-earnings (P/E) ratio of 18, but that falls rapidly under the predicted strong earnings growth.
Taylor Wimpey
Housebuilder Taylor Wimpey reported a strong set of full-year results earlier this month, with underlying EPS up 67%. The company also said: “The beginning of the spring selling season has seen both demand and trading at the better end of our expectations”.
Taylor Wimpey continues to be the City experts’ strong favourite over Footsie rivals Persimmon and Barratt Developments. Beaufort Securities commented, in the wake of the results:
“Macro economic factors such as strong consumer confidence and low interest rates are likely to play the role of key catalysts towards augmenting the UK housing market growth in the coming period. Taylor Wimpey’s strong land bank and order book, strategic investments, and attractive trading numbers are likely to generate significant shareholder returns”.
Consensus analyst forecasts put Taylor Wimpey on a P/E of 10, with a juicy 6% dividend yield.
Barclays
Barclays has been the bank with the strongest support among City analysts for the past two years or so. That hasn’t changed since the recent season of annual results from the banks. Barclays’ results were mixed — like those of most of its peers — but management said: “Barclays today is a stronger business, with better prospects, than at any time since the financial crisis”.
Analysts at UBS reckon Barclays’ current valuation is “unchallenging”, commenting:
“With around a third of group capital currently consumed by an under-earning Corporate and Investment Banking (CIB), and a third of capital within the loss-making non-core: we see material medium-term upside as management reposition the business towards its low-volatility, high profitability core”.
A number of analysts point to the attractiveness of Barclays’ shares trading at a discount to the bank’s tangible net asset value.