Although stock markets have risen significantly in the last few years, I’m looking at the investment upside potential of Tesco PLC (LON:TSCO) (TSCO.L), Prudential plc (LON:PRU) (PRU.L), easyJet plc (LON:EZJ) (EZJ.L), Persimmon plc (LON:PSN) (PSN.L) and BHP Billiton plc (LON:BLT) (BLT.L).
Tesco is forecast to report a rise in EPS of 51% this year, followed by further growth of 26% next year. That’s in spite of a difficult outlook for UK retailers. In my view, the company has a good strategy which is focused on improving margins. While there could be some short term uncertainty and volatility for the stock, Tesco seems to have a good strategy through which to perform relatively well.
The same could be said for easyJet. It faces an uncertain outlook, with demand for flights in Europe coming under pressure in the last few years. This has caused the company’s EPS to fall, but it is expected to post a rise again next year. This is partly due to easyJet’s strategy, where it is focused on raising passenger numbers. This could help to improve its long-term financial outlook and boost investor sentiment.
Persimmon has been able to markedly improve its financial position in the last few years. It now has a large net cash position and this could help it to perform well through potential challenges faced by the housing market. With the supply of homes set to be well below demand levels, house price growth could continue in future. This makes me optimistic about the investment prospects of Persimmon.
BHP Billiton is one of my favourite resources stocks. I like its 4.4% dividend yield and its diversity. I feel this helps to reduce its risk levels. As well as this, BHP Billiton is expected to deliver a rise in EPS of 12% next year. With a PEG of 1.1, this could suggest it has investment appeal at this moment in time. With the potential for a higher oil price, I’m feeling upbeat about the company’s longer-term prospects.
Prudential’s exposure to Asia could be a key catalyst on its EPS performance in my view. It means the company is well-placed to capitalise on the rising wealth levels in the region, as well as increasing demand for financial services products. With a P/E that is due to fall to 12.5 in 2018, Prudential seems to offer good value for money relative to a number of its financial services sector peers.