The prospects for shares in Vodafone Group Plc (LON:VOD) (VOD.L), Saga PLC (LON:SAGA) (SAGA.L), Interserve plc (LON:IRV) (IRV.L) and Taylor Wimpey plc (LON:TW) (TW.L) may seem to be uncertain at the moment. But could their share prices deliver impressive recoveries after a disappointing period?
Vodafone’s share price has come under pressure in recent months, with the company facing increased competition in some of its key markets.
The telecoms company now has a dividend yield in excess of 7%, which makes it one of the highest-yielding shares in the FTSE 100. With partnerships and acquisitions having the potential to boost Vodafone’s EPS growth rate, I think that it could offer improving returns in the long run.
Taylor Wimpey’s share price has also come under pressure of late. Investors seem to be uncertain about the prospects for the housing market ahead of Brexit.
However, with interest rates set to remain low and the government’s Help to Buy scheme keeping demand high, the outlook for Taylor Wimpey may be more positive than the stock market is anticipating. Its 9%+ dividend yield suggests that it may have a large margin of safety.
Saga’s recovery potential may seem to be relatively limited in the near term. The company’s EPS forecasts over the next couple of years are relatively disappointing, and could keep investor sentiment pegged back.
However, with the company having a relatively loyal customer base in my view, it could offer more resilient performance than its valuation suggests. Saga’s shares currently trade on a P/E ratio of around 10, which indicates that they may offer a margin of safety.
Interserve’s cost-cutting strategy could have a positive impact on its financial performance in my view. It has the potential to create a stronger business at a time when revenue growth may be relatively limited.
With Interserve having relatively high debt levels and being set to report a significant decline in EPS this year, though, I think there may be better options available for me elsewhere.