So many big-name stocks have been struggling lately that its nice to come across a trio whose outlook has brightenedin recent weeks.
The right equipment
Equipment rental firmAshtead Group (LSE: AHT) has enjoyeda buoyantfew years so recent positive results are just a continuation of itssuccessful run. Theshare price is up 508% over five years, although growth has slowed in the last 12 months. Things are picking up again with it posting a strong Q4 with profit margins hitting record highs. To complete the joy for investors, Ashteadannounced a juicydividend hike anda200m share buyback at the same time.
With underlying earnings per share leaping47% in the final three months of the year Ashteadis on a roll. Chief executive Geoff Drabble reckons its on course for bothstrong earnings growth andcash flow,giving investors the dream combination of rising profits and enhanced shareholder returns. Fears may be growing over the health of the US economy but that hasnt harmedAshteadskey USdivisionSunbelt, which increased itsmarket share after posting healthy like-for-like growth of 12%. Despite all the good news, Ashteadtrades at just 12.19 times earnings. The company has already shown it has the right equipment, now its clear it knows exactly how to use it.
Toxic clear-up
The last five years have been a very different story for Barclays (LSE: BARC)butthe share price is showing signs of life, rising 15% in the last three months. Ive been flying the flag for Barclays for some time and now it doesnt seem such a lonely occupation, especially asI have some support from broker Exane, which saysthe fog is lifting over the business.
Yes, cutting the dividend hurt, PPI and other scandals sting, Brexit casts a shadow and nobody knows whether Barclays is reducing risk by offloadingits African operations or shooting itself in the footby exiting potentially profitable emerging markets. However,the dividend will be repaired, PPI will one dayfade from memory, the capital base will strengthen, and earnings will start rising. EPS may be forecast to drop 20% this year, but analysts reckon EPSwill rise 62% in 2017, whichisnt far away. Securing a decent dividend may take longer, with the yield forecast to be just 1.9% by the end of next year, but eventually it must come.
Turning up the gas
These have all also been tough times for British Gas owner Centrica (LSE: CNA), with the companys share price down 33% over five years, but now there are signs of hope with UBS just upgrading it from sell to buy, which isquite a leap.
UBSsays the two factors driving down Centrica theCompetition and Markets Authority (CMA) enquiry into industry competition and falling commodity prices have both eased. The CMA has resisted calls to break up British Gas, oil is above $50 a barrel and Centrica has raised the capital to shore up its balance sheet andfree cash flowis on course to hitaround 1bn a year.
Thats all good, especiallyif it means the generous dividend issafe, with Centrica forecast to yield 6.2% by the end of 2017. Trading at 12.42 times earnings now mightbe a great entry point for contrarians.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and Centrica. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.