I’m taking a look at whether the share prices of SSE PLC (LON:SSE) (SSE.L), Interserve plc (LON:IRV) (IRV.L), British American Tobacco plc (LON:BATS) (BATS.L) and BHP Billiton plc (LON:BLT) (BLT.L) could deliver high returns.
In my view, British American Tobacco has significant growth potential. The company is gradually moving into the reduced risk products space, and this could be a profitable area over the long run.
British American Tobacco is aiming to generate around £5 billion in sales from the next generation products segment by 2022. This could catalyse its EPS growth rate and help to offset challenges within the tobacco segment, where cigarette volumes continue to decline.
Interserve is a stock that I used to hold in my portfolio a few years ago. It is a company that I think has a sound underlying business model, but the problems it faces at the moment mean that the risks outweigh the rewards in my mind.
For instance, Interserve faces uncertain trading conditions, while its balance sheet has a large amount of debt according to my research. Therefore, I’m not looking to buy back in at the moment.
SSE is a strong income stock in my opinion. The company may have experienced a declining share price in recent periods, but this may be due to regulatory and political concerns. Now, with a 7%+ dividend yield it seems as though the stock market may have priced in the potential difficulties which the company may face.
With SSE planning on spinning-off its UK domestic energy supply operations, I think that the company may face a brighter future.
BHP Billiton remains one of my preferred options within the resources industry. The company seems to offer a good mix of diversity and growth potential, and may be able to deliver outperformance versus its sector peers.
As someone who is generally bullish about the long-term prospects for commodity prices, I believe that BHP Billiton could be a strong performer in the coming years. It seems to offer a sound valuation and impressive income investing prospects.