This article looks at two Footsie stocks ideal for those seeking brilliant earnings growth.
NMC Health
NMC Health has long been a reliable deliverer of double-digit annual profits expansion. Healthcare is one of the ultimate defensive havens so this should come as no surprise, I suppose.
However, the business -- which is the biggest private healthcare provider in the United Arab Emirates -- has been expanding at a blistering pace to really capitalise on this exciting emerging market and drive revenues through the roof. NMC Health saw turnover swell 31.3% last year to $1.16bn, helped by a 33.5% improvement in patient numbers at its core Healthcare unit which rose to 5.8 million.
City analysts are predicting the business will deliver a further 45% earnings improvement in 2018, and that it will follow this with an 23% advance next year.
Yet despite its formidable growth record NMC Health is priced extremely attractively. Sure, a forward P/E ratio of 31.7 times may not provide much to celebrate. But a corresponding PEG multiple of 0.7, comfortably below the accepted bargain watermark of 1, suggests that the healthcare giant is actually splendidly priced relative to its anticipated growth trajectory.
Unilever
As I noted a couple of months ago, Unilever is one of the best blue chips out there for share pickers seeking reliable earnings growth year after year.
Its broad range of labels, from Magnum ice cream and Lipton tea to Domestos bleach and TRESemmé shampoo, are loved by customers like few others and can be counted on to keep driving the top line whatever the weather.
There are other reasons to laud Unilever as one of the best defensive stocks for Footsie investors, too. Its products can be found across the home, meaning that earnings can continue to rise even if one or two of its product segments falls out of favour with the public (as was the case with its now divested Spreads unit).
And in addition to this, Unilever’s wide geographic footprint puts it in a strong position to ride out the effects of broader macroeconomic troubles in certain territories. It also gives it supreme exposure to emerging economies where booming population levels and improving personal affluence levels should underpin strong revenues growth in the years ahead.
City analysts are expecting the household goods play to generate earnings rises of 6% and 10% in 2018 and 2019 respectively. Yet despite its exceptional long term sales outlook current estimates mean that Unilever can be picked up on a pretty undemanding forward P/E rating of 19.1 times.
What’s more, Unilever’s exceptional earnings visibility (allied with its formidable free cash flow) also makes it a standout pick for those seeking dependable dividend expansion, too.
In the near term, for example, Square Mile is expecting last year’s payment of 143 euro cents per share to jump to 156 cents this year and to 170 cents in 2018. And these projections yield a meaty 3.5% and 3.8% respectively.
Unilever's share price has been really on the ropes over the past six months. I reckon, however, that the release of first quarter trading details on Thursday, April 19th should remind investors of its exceptional growth qualities and could well prompt a flurry of fresh buying activity.
