This week, I’m considering the future prospects from an investment perspective of J Sainsbury plc (LON:SBRY) (SBRY.L), ASOS plc (LON:ASC) (ASC.L), National Grid plc (LON:NG) (NG.L) and Legal & General Group Plc (LON:LGEN) (LGEN.L).
Sainsbury’s could face an uncertain future. The company operates in an industry which is fiercely competitive, with discount retailers such as Aldi and Lidl continuing to gain market share. However, with Sainsbury’s having purchased Argos it could deliver improved sales and profitability due to the cross-selling opportunities it now has available. As well as this, Sainsbury’s has what appears to be a sound balance sheet and low valuation.
ASOS is forecast to increase its EPS by 26% this year. This would make it the third year in a row of double-digit EPS growth and suggests that the company is back on track after a difficult few years. The business seems to have a sound strategy and I feel its level of customer loyalty continues to increase. ASOS has international exposure and this may help it to perform well even if the UK retail outlook remains tough due to rising levels of inflation.
National Grid has not been a particularly popular stock this year. In fact, utility stocks in general have been shunned by investors as growth stocks have become more in-demand. That situation may continue in the short run, but since National Grid has a dividend yield of over 5%, it could become more popular over the medium term as inflation is forecast to move higher. Therefore, while 2017 has not been a good year for the stock, next year could be a better one.
Legal & General also appears to have income investing appeal. It has a dividend yield of 5.8% this year, which is expected to move to 6.1% next year because of forecast dividend growth. The company’s shares seem to be lowly-priced, with a rating of 10.5 suggesting they may offer a large margin of safety. With what seems to be a diversified business model, Legal & General could perform well in 2018.