The investment prospects of Tesco PLC (LON:TSCO) (TSCO.L), BP plc (LON:BP) (BP.L), Royal Mail PLC (LON:RMG) (RMG.L) and Standard Life Aberdeen PLC (LON:SLA) (SLA.L) may seem to be relatively challenging at the moment.
Tesco, for instance, faces weaker consumer confidence. Even though inflation is below wage growth, consumers seem to be cautious about the prospects for the UK economy ahead of Brexit. This could mean that they become increasingly price-conscious over the near term in my view.
However, with Tesco delivering continued sales growth and continuing to invest in its products and customer service levels, I feel it is in a strong position relative to peers. Its PEG ratio of around 0.8 indicates to me that it may offer good value for money for the long term.
The falling oil price has hurt the BP share price in recent weeks to my mind. The stock could experience further challenges as investors factor in the potentially higher levels of supply growth which could come into effect after the US put in place sanctions waivers with regard to Iran.
However, with BP having a dividend yield of around 6%, I feel that the company could offer a margin of safety. While potentially volatile, its investment and recent acquisition of BHP’s petroleum assets could help to drive profitability higher.
Royal Mail’s recent profit warning highlighted that cost savings initiatives being pursued may not be as successful as hoped. As a result, its EPS growth is expected to be negative in the current year, and this could prompt further weakness in its share price in the near term in my opinion.
However, with demand for the FTSE 100 company’s parcel deliveries and its international prospects seemingly sound, I’m optimistic about the long-term outlook for the business. Royal Mail seems to have a margin of safety following its share price fall to my mind, with a dividend yield of over 5% suggesting to me that it may offer good value for money.
Standard Life Aberdeen seems to be putting in place a sound growth strategy in my view. The company is rationalising its asset base and this may lead to a stronger focus on its core areas.
Although global stock markets are relatively volatile at the moment, I think that the company’s 7%+ dividend yield may suggest that it offers an appealing valuation. Although its merger may not yet have delivered the financial performance that was anticipated, I feel that Standard Life Aberdeen’s improving financial outlook may help to catalyse its total returns.