Today I’m looking at the splendid growth prospects of Barclays (LSE: BARC) and Topps Tiles (LSE: TPT).
Coming out on Topp
Interior decorations play Topps Tiles (LSE: TPT) cheered the market once again in midweek business with another bubbly trading update, further boosting its credentials as a potentially-explosive growth pick in the near-to-long-term.
The Cheadle firm advised that like-for-like sales advanced 4.4% in the 13 weeks to 2 January, helped by the launch of 17 new product ranges. Indeed, product lines launched during the past 12 months now account for 8.9% of total sales.
On top of this, Topps Tiles’ commitment to opening new outlets and refurbishing old stores also continues to chug along nicely, and the business opened its second ‘lab store’ in Shoreditch during the quarter.
The number crunchers expect Topps Tiles to punch a 9% earnings advance in the 12 months to September 2016, down from growth of 23% last year but producing a reasonable-if-unspectacular P/E rating of 17.5 times.
And with the property sector still on a firm uptrend and rising consumer spending power fuelling demand for DIY-related products, I fully expect sales at Topps Tiles to keep on heading higher.
Bank set to impress
Banking giant Barclays has seen earnings oscillate wildly during the past five years. The huge cost of restructuring, underperformance at the company’s Investment Bank, and a steady stream of crippling regulatory fines played havoc with the bottom line.
But thanks to the huge gains achieved by Barclays’ Transform expense-slashing programme, and a steadily-improving UK economy boosting revenues, the bank is expected to report two consecutive earnings rises for the first time since before the 2008/2009 financial crisis.
City consensus suggests Barclays will report a 24% earnings bounce in 2015, following on from the 13% rise reported in the previous year. And further gains would appear to be on the cards – current forecasts suggest a 21% advance is in the offing for 2016.
This latter projection leaves Barclays dealing on a P/E rating of 8.6 times, comfortably below the watermark of 10 times that reflects exceptional value. And a sub-1 PEG rating of 0.4 underlines the firm’s brilliant value relative to its growth prospects.
The appointment of ex-JP Morgan man Jes Staley as CEO back in the autumn has led to plenty of chatter concerning the direction of the bank, naturally. Speculation that Barclays’ investment banking operations are about to receive a new lease of life have dominated headlines, though more recent rumours that the bank may reduce its exposure to Africa may also have a huge effect on its long-term earnings prospects.
Still, I believe that the solid momentum of Barclays’ Retail Banking and Barclaycard operations bodes well for the bank’s earnings outlook. Meanwhile improvements to the bank’s technological services should continue to strip out costs, not to mention curry favour with increasingly-savvy digital banking customers.