I’m always seeking stocks that could deliver higher returns than the FTSE 100, which is why I’m focusing on the prospects of Barclays PLC (LON:BARC) (BARC.L), Rolls-Royce Holding PLC (LON:RR) (RR.L), British American Tobacco plc (LON:BATS) (BATS.L) and Standard Life Aberdeen PLC (LON:SLA) (SLA.L).
The prospects for the Rolls-Royce share price seem to be more positive than they were a couple of years ago. The company has been focused on improving its efficiency, with it cutting costs and also seeking to become more innovative.
Alongside what could prove to be an improving defence sector, this could provide a boost to the financial outlook for Rolls-Royce. This could help it to outperform the FTSE 100 after what has been a disappointing 12 months for its stock price.
Barclays could also outperform the FTSE 100 in my view. The company appears to have a solid growth outlook after completing its restructuring.
In spite of positive EPS growth over the next couple of years, the Barclays share price trades on a relatively low PE ratio of around 11. In my view, this suggests that it could offer a large margin of safety and potential capital growth over the medium term.
British American Tobacco is a stock that I feel could be underrated at the moment. Its update released yesterday showed further volume declines for tobacco, but this could be offset by the growth potential in next generation products.
With British American Tobacco having a dividend yield in excess of 4%, it seems to offer good value for money in my view. The company may experience an uncertain period in the next few years, but it could find new sources of growth over the medium term.
Standard Life Aberdeen is a company which has experienced an interesting six-month period. Its merger has not quite panned out as expected, with it losing its biggest client and seeing its valuation come under pressure as a result.
However, the increasingly dominant position it enjoys post-merger and the possible synergies from the deal could lead to an improved outlook for the Standard Life Aberdeen share price in my opinion.