While investor sentiment may have fallen in recent days, I’m still looking for stocks with growth potential and that’s why I’m considering the outlooks for HSBC Holdings plc (LON:HSBA) (HSBA.L), easyJet plc (LON:EZJ) (EZJ.L), Next plc (LON:NXT) (NXT.L), Tesco PLC (LON:TSCO) (TSCO.L) and Burberry Group plc (LON:BRBY) (BRBY.L).
HSBC is making improvements to its business model in my view. It is gradually reducing its costs so that it becomes leaner and more competitive versus its peers. This could lead to a stronger business in the long run which is better able to grow its EPS. Its pivot to Asia may also boost its overall profitability due to the increasing demand for financial products in the region. Therefore, with a PE of around 12, I think HSBC has investment appeal.
easyJet is a company that is in the middle of a turnaround in my view. The company has been able to increase its passenger numbers in recent periods and this has created the opportunity for it to grow EPS in the current year. With competition remaining high, its performance in the near term may still be challenging. But with a value proposition, I feel easyJet could have a competitive advantage versus some of its rivals.
Next’s position in the retail sector remains strong in my opinion. The company appears to have a significant amount of customer loyalty. This was evident in the financial crisis when it was able to generate rising profitability following an initial fall. With inflation being above wage growth, I feel Next could be one of the better performing retailers over the long run.
Tesco is another retail share which I think may offer upside potential. The company has been focused on generating improvements to its business model in recent years under current management. It has been able to improve its efficiency and become more customer-focused. Alongside the Booker acquisition, this could boost Tesco’s EPS and share price in future.
Burberry is undergoing a period of major change which may create a stronger entity in the long run. The company has been able to put in place a plan to focus on luxury items. This may create greater pricing power, which could translate into higher margins and profitability. With cost cuts on the horizon, I think Burberry is in good shape to deliver a rising share price in the coming years.