Shares in Aviva (LSE: AV) have disappointed in the last year, being up less than 2% versus a 3% gain for the FTSE 100. However, that could be about to change, with Avivas future growth potential and valuation likely to stimulate investor sentiment and allow the insurer to beat the index moving forward.
For example, Aviva is expected to increase its bottom line by 12% next year, which is around twice the growth rate of the FTSE 100. And, with Aviva trading on a price to earnings (P/E) ratio of just 11.2, it offers much better value than the wider index, which has a P/E ratio of 16, thereby making outperformance by Aviva a relatively likely outcome.
Also offering FTSE 100-beating potential is fellow insurer, Admiral (LSE: ADM). Its potential catalyst, though, is its income potential. For example, Admiral has a dividend yield of 6% at the present time and, with dividends set to rise by 9.4% next year, holding the shares for two years could mean a total income return of 12.8%.
And, with interest rates set to remain at less than 1% for the entirety of 2015 and 2016, it would not be particularly surprising for such an excellent yield to attract investor attention and push Admirals share price significantly higher.
It is understandable for many investors to feel that it is too late to invest in pharmaceutical company, Shire (LSE: SHP). After all, its shares are up by 22% since the turn of the year, which brings their total capital gain to 314% over the last five years.
However, Shire still offers excellent growth potential, with its top line forecast to increase by around 18% over the next two years. And, looking further ahead, Shire is confident that its sales will double by 2020, which could act as a major catalyst on its share price performance and keep its excellent run of capital gains going.
While the stock market has shown little sign of uncertainty regarding the potential for the UK to leave the EU in 2016/2017, it is very likely that there will be at least some fear among investors regarding this potential outcome. As such, defensive stocks such as United Utilities (LSE: UU) appear to be excellent buys at the present time.
And, while utility companies have a reputation of lacking capital growth potential, United Utilities has comprehensively beaten the FTSE 100 over the last five years, with gains of 87% versus 38% being posted. With its shares offering a beta of 0.88 and a yield of 3.9%, its defensive merits could attract investors and cause them to bid up its share price.
It is understandable that investors seeking out a pharmaceutical stock may at first seek to avoid BTG (LSE: BTG). After all, its shares have fallen by 8% so far this year, while many of its peers (including Shire) have easily outperformed the FTSE 100. However, this means that, if anything, BTG is all the more worthy of purchase, since it continues to offer superb value for money.
For example, BTG currently trades on a price to earnings growth (PEG) ratio of just 0.5 and, while it currently pays no dividend, the appeal of high growth at a low price could be enough to turn its share price performance around and allow it to turn the tables on the wider index in future.
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