In a recent article I looked at three low-priced dividend shares from the FTSE 100 that could make you a fortune.
This piece takes a look at a cluster of three great growth shares from Britain’s premier share index.
Ashtead Group
As trading conditions go from strength to strength in Ashtead’s main markets, I am confident the company’ share price, which has risen 50% in value over the past year alone, should keep on swelling.
In its full-year financials last month the FTSE 100 business advised that rental revenues across the group boomed in 2017 to £3.42 billion, while pre-tax profit rose to £927.3 million. Both of these figures represented a 21% year-on-year increase.
Ashtead noted that ‘our end markets remain strong and are supported by the continued structural changes in our market as customers rely increasingly on rental while we leverage the benefits of scale,’ a strong indicator for future profits expansion. And with the company vowing to continue investing heavily to generate organic growth (it expects capital expenditure for 2018 to match last year’s bill of £1.2 billion), and to remain busy on the M&A front too, it’s no surprise that City brokers are expecting earnings to keep swelling by double-digit percentages.
A 28% profit jump is forecast for 2018 by City brokers, and a 12% rise estimated for next year. Consequently the business can be picked up on a forward P/E ratio of just 14.3 times.
Bunzl
Bunzl has not generated earnings growth at the same breakneck pace as Ashtead. And the number crunchers are not expecting profits to blast through the stratosphere any time soon, either — rises of 5% and 4% are projected for 2018 and 2019 respectively.
The support services giant has seen sales slow more recently as trading has returned to more normal levels. But thanks to its acquisition-led growth strategy I am confident that investors can, unlike many Footsie-quoted shares, bet the house on profits to keep on rising long into the future (Bunzl has spent £105 million on M&A so far in 2018 and has advised that ‘the pipeline for acquisitions remains active and… the company expects to complete further transactions during the remainder of the year’).
Even though the business’s probable growth trajectory may be considered more boring compared with many of its FTSE 100 colleagues, those seeking reliable bottom-line growth year after year can’t go wrong by investing here. Thanks to its broad range of products offered across many industries the world over, it is immune to weakness in one or two sectors or territories. And this makes Bunzl worthy of a slightly-toppy rating, a forward P/E ratio of 18.4 times.
DCC
A healthy appetite for takeovers provides plenty of reason to expect earnings at DCC to keep swelling too. The FTSE 100 firm spent a record £670 million on M&A activity last year, with its core DCC LPG division making its maiden its first acquisitions in the hot growth regions of the US and Asia in the period.
Right now the business, which provides sales, marketing and support services to a variety of industries, is witnessing strong demand growth across all of its major divisions, and this underpins City earnings growth forecasts of 17% for the year to March 2019 and 5% the following year.
Like Bunzl, DCC changes hands on a slightly-expensive forward P/E multiple of 18.7 times. This is a small price to pay given the rate at which revenues are growing, in my opinion.
