ARM
Over the course of the last year, shares in ARM (LSE: ARM) (NASDAQ: ARM.US) have easily outperformed the FTSE 100. In fact, after a rather lacklustre period when there were doubts surrounding the company’s growth potential and whether it was becoming a slower-growing entity, ARM has outperformed the FTSE 100 by 23% in the last year.
A key reason for that is an improved outlook for the business, with its focus on intellectual property allowing it to remain nimble and fast-growing – even for a relatively mature business. As such, ARM’s earnings growth outlook has improved and the company is now forecast to increase its bottom line by a whopping 74% in the current year. This has certainly catalysed investor sentiment, with ARM’s price to earnings (P/E) ratio of 37.1 now appearing to offer good value for money.
And, with ARM set to increase its bottom line by a further 20% next year, its outperformance of the wider index looks set to continue over the medium term.
SABMiller
Life for alcoholic beverages companies such as SABMiller (LSE: SAB) (NASDAQOTH: SBMRY.US) has been tough in recent months. That’s because demand from the developing world has stalled somewhat, although SABMiller reported a pickup in China in the most recent quarter of the year, which bodes well for its outlook.
Despite this, shares in SABMiller have risen by twice the FTSE 100’s return in the last year and, looking ahead, this could be repeated. That’s because SABMiller offers a growth rate that is in excess of the wider market, with its bottom line expected to rise by 8% next year, for example. In addition, it remains a relatively defensive stock that could outperform a volatile FTSE 100 in the months ahead, with its robust business model offering stability during what could prove to be a challenging period for the wider index.
Standard Life
With UK interest rates seemingly more likely to fall than rise over the next year (due to the potential impact of deflation on the economy), companies that offer strong dividend prospects could find themselves in even greater demand. One such stock is Standard Life (LSE: SL), which currently yields a very impressive 4.4%.
However, there is considerable potential for the company’s dividends to rise significantly over the medium term. That’s the case for two reasons, with the first being that Standard Life’s earnings are set to double between 2014 and 2016. This should allow shareholder payouts to rise at a rapid rate, with the company’s expected payout ratio of 67% next year also indicating that there is scope for further rises even if profit growth is not as fast post-2016.
And, with such large income appeal, Standard Life could turn the tables on the FTSE 100, which has outperformed the insurance company by 4% in the last year.