The growth prospects for AstraZeneca plc (LON:AZN) (AZN.L), Diageo plc (LON:DGE) (DGE.L), Rolls-Royce Holding PLC (LON:RR) (RR.L) and Ocado Group PLC (LON:OCDO) (OCDO.L) could be improving in my opinion.
AstraZeneca’s investment in its pipeline over recent years may deliver a successful turnaround in terms of its EPS performance. After years of decline, it is forecast to post double-digit EPS growth next year.
With the stock also having defensive characteristics in my opinion, I feel that it could offer investment appeal for the long run. A PEG ratio of 1.6 suggests to me that AstraZeneca may offer good value for money.
Diageo’s growth prospects appear to be improving in my opinion. It is seeking to focus on its core brands, with the recent sale of a number of non-core brands being evidence of its progress in this area.
With exposure to emerging markets, I feel that Diageo is well-placed to capitalise on rising disposable incomes. Although not a cheap share, I believe that it could be worthy of a premium compared to the FTSE 100 as a result of its defensive growth characteristics.
Ocado could continue to benefit from increasing demand for online shopping. Its technology is enabling it to form partnerships with major retailers across the world, and this could lead to improving financial performance.
Although the company is set to remain loss-making in the next couple of years, I think the potential for Ocado in terms of a tailwind from online retailing could lead to further capital growth over the medium term.
Rolls-Royce could benefit from increasing demand across the defence industry. NATO members are set to increase defence spending as a proportion of GDP to 2% over future years, while the US continues to boost military spending under President Trump.
With the company also set to increase its total addressable market through being able to supply engines to narrow-bodied aircraft from the mid-2020s onwards, I believe the Rolls-Royce share price could have a bright long-term future.