Im continuing my look at some of the tempting companies offering up their latest figures next week, and my thoughts are turned to three that will be bringing us first-half results some ideas to chew on over the weekend, perhaps, while we await the revelations:
Top pharma
Ive always had a soft spot for our big pharmaceuticals firms, as despite recent problems with the expiry of some key drugs, theyre the ones that have the financial muscle to drive in whatever direction medical technology might go. As an example of that, GlaxoSmithKline (LSE: GSK)(NYSE: GSK.US) has just received regulatory approval for the worlds first malaria vaccine its only aimed at babies in Africa at the moment and Glaxo will not be making a profit with it, but its a headstart in a potentially very lucrative market.
The shares have actually slipped by 8% over the past 12 months to 1,350p as a return to earnings growth is not expected until 2016, but we should be seeing 6% dividend yields in the meantime only barely covered if that, but Glaxo has the cash to pay them. At Q1 time in May, Glaxo told us it expects revenue to rise at a compound annual growth rate (CAGR) of low-to-mid single digits in the 2016-2020 period, with core EPS to show a CAGR of mid-to-high single digits in the same period, and well hopefully hear more on that when we get half-time figures on Wednesday.
Televisual entertainment
A day before that, on Tuesday, we should get interim results from ITV (LSE: ITV). If youd bought ITV shares five years ago, youd be sitting on a five-bagger today with the price at 271p and even the last 12 months has seen a 29% gain. And every penny of that gain has been deserved, as ITV has achieved strongly rising earnings to back it up as it has reshaped itself into a quality content provider.
From earnings of 6.4p per share in 2010, ITV more than doubled it to 13.8p in 2014, and forecasters are expecting more of the same in the next two years. The dividend has grown too, but with the share price soaring the yield has remained around 2-2.5%. At Q1 time the firm reported a 14% rise in total revenue, with chief executive Adam Crozier telling of further growth across all parts of the business as we continue to deliver against our strategy.
The shares are on a P/E of 15.6 based on 2016 forecasts, and I dont think thats too high based on the companys clear potential.
Profitable weed
Tobacco might be increasingly frowned on, but that hasnt stopped British American Tobacco (LSE: BATS) shares from putting on 63% over five years. Thats not in the same league as ITV, but its more than double the FTSE 100s overall performance over the same period. The share price rise did actually falter around mid 2013 and has been flat since, as sales volumes continued to fall and earnings growth tailed off.
But analysts are forecasting a return to growth in 2016, and at Q1 time it appeared that the company is still managing to compensate for falling cigarette volumes with a shift towards more upmarket and more profitable brands overall volumes fell 3.6%, but Global Drive Brands volumes rose 5.7%.
At 3,584p, British American shares are on a 2016 P/E of under 16, but theres a well-covered dividend yield of 4.4% on the cards. I wouldnt buy tobacco shares myself for ethical reasons, but I reckon theres solid income to be had here for some years to come. First-half results on Wednesday.
If you’re looking for great new growth opportunities, our hot new report identifies 1 Top Small-Cap Stock From The Motley Fool that’s looking good. It’s a smaller company that has already rewarded its shareholders with a stonking performance, yet the Motley Fool’s top analysts reckon there could be a further 45% upside to come.
Want to know the name of this potential small-cap winner? Just click here to get your completely free report today.
Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.