Today I’m looking at two FTSE favourites offering spectacular value for money.
A bankable bargain
Thanks to its hefty presence in Asia, I believe banking giant HSBC (LSE: HSBA) is in great shape to deliver stonking shareholder returns in the years ahead.
Shares in the business have trekked lower in 2015, as fears over economic cooling in emerging markets, allied with concerns over catastrophic regulatory fines and the future of its London base, have clouded market appetite.
However, I believe investors are overlooking the huge potential created by galloping banking product demand in these regions, a factor that continues to power revenues at HSBC higher.
The City expects HSBC to generate earnings growth of 16% in 2015, resulting in a mega-low P/E rating of 10 times – any number around or below this reading is widely considered irresistible value. And HSBC’s multiple remains low at 10.2 times for next year, despite expectations of a 2% bottom-line dip.
Despite that anticipated slip, HSBC’s promising long-term earnings outlook is expected to keep dividends chugging higher. And investors should take heart from the bank’s steady capital build in the meantime as cost-cutting ticks higher and risk-weighted assets fall – HSBC’s CET1 ratio clocked in at a robust 11.8% as of October, up from 11.6% three months earlier.
Consequently the number crunchers have pencilled in a dividend of 51 US cents per share for 2015, up from 50 cents last year and yielding a monster 6.4%. And the yield remains around this level for 2016 thanks to predictions of a 52 cent reward.
Drink it in
But HSBC isn’t the only hot value pick in town, in my opinion. Beverages beauty Britvic (LSE: BVIC) continues to defy challenging market conditions and the impact of adverse currency movements – indeed, pre-tax profits rose 10.6% in the 12 months to September 2015 due to healthy drinks demand and the results of massive restructuring.
And Britvic has ambitious plans to turbocharge sales in red-hot territories in the years ahead. The firm’s acquisition of Brazil’s ebba this year gives it a significant foothold in the world’s second-biggest diluted drinks market, and Britvic is due to launch its Fruit Shoot multipack range in the US in the coming months.
However, the Square Mile expects the double-digit earnings rises of recent years to grind to a halt in the period to September 2016. Britvic is expected to punch ‘only’ a 6% advance in the period. But this reading is hardly anything to be scoffed at, particularly as the company’s colossal investment plans should power profits much higher in the years ahead.
On top of this, fiscal 2016’s projection results in a P/E rating of 14.4 times, comfortably under the watermark of 15 times that indicates attractive value.
And dividends at Britvic are expected to keep surging higher in the near term and beyond, and an increase to 24.1p per share in 2016 from 23p last year is currently forecast. The drinks giant therefore boasts a juicy yield of 3.4%.