Today I am revealing three Footsie stocks I expect to provide excellent returns through the next 10 years.
Those seeking electrifying earnings growth need to give the housebuilders a miss, in my opinion.
Concerns over the fallout of the UK’s upcoming Brexit have put paid to the eye-popping increases in property values of recent decades, and with a European Union exit likely to prove many years in the making, homebuyer confidence is unlikely to shoot higher again in the immediate future.
Having said that, I believe the likes of Taylor Wimpey should remain dependable earnings generators over the next decade at least. The country’s colossal housing shortage is not likely to be remedied any time soon given the inaction of successive governments in building new homes, and this should keep profits for the country’s construction stars rising for a long time yet.
At the moment City analysts are forecasting earnings expansion of 6% and 9% in 2017 and 2018 correspondingly for Taylor Wimpey, projections that make the FTSE 100 star exceptional value for money — it sports a forward P/E ratio of just 10.4 times.
Taylor Wimpey provides plenty for dividend seekers to sink their teeth into, too. The predicted 13.6p per share reward for 2017 yields a stunning 6.8%, and the 15.1p dividend forecast for next year yields 7.6%.
I believe investors on the lookout for reliable profits producers should also swing by household goods producer Reckitt Benckiser Group.
Products like Strepsils throat lozenges, Vanish stain remover and Calgon indigestion relievers can be found in the cupboards of homes across the globe. The superior quality of these labels, allied with the vast amounts Reckitt Benckiser is spending on innovating and marketing these items, has ensured that they continue to fly off the shelves whatever the weather.
Reckitt Benckiser has fallen out of favour with stock pickers more recently due to fears over whether the recent $17.9bn takeover of Mead Johnson was an act of desperation rather than of sound strategic rationale. But I am not so concerned — rather, I reckon its entry into the baby formula market adds another layer to its already well-diversified brand stable.
City analysts are forecasting earnings rises of 9% in 2017 and 12% in 2018, and I am convinced profits should continue rising steadily in the coming years. Investors should look past Reckitt Benckiser’s high forward P/E multiple of 21.2 times and pile in, in my view.
I reckon Whitbread’s insatiable desire for foreign expansion also makes it a stellar pick for those seeking great profits growth now and in the future.
The Costa Coffee and Premier Inn operator has a long history of earnings expansion behind it, and the number crunchers do not see this trend grinding to a halt just yet. Extra increases of 4% and 8% are chalked in for 2017 and 2018 respectively, and current projections also make Whitbread very decent value for money, the company rocking up with a mere prospective P/E multiple of 13.6 times.
Just this week Whitbread bought the 49% stake it did not already hold in its South China joint venture for £35m, a territory where it already boasts 252 Costa Coffee outlets. The business had vowed as recently as July ‘to accelerate the development of our international businesses in… attractive markets and continue to look for opportunities to grow more quickly,’ and it is clearly putting its money where its mouth is.
Demand for its hot drinks and cut-price beds continue to soar (sales at Costa Coffee and Premier Inn rose 8.7% and 9.2% during April-June, according to Whitbread’s latest trading update), and I am backing its ambitious growth strategy to continue churning out brilliant profits in the years to come.
Royston Wild owns shares in Taylor Wimpey.