Are Standard Chartered plc, Esure Group plc, Royal Bank of Scotland Group plc and Jardine Lloyd Thompson Group plc on course to beat the FTSE 100?
In the last month, shares in Standard Chartered(LSE: STAN) have outperformed the FTSE 100 by around 5%. While this is a relatively short time period, the Asia-focused bank has the potential to continue to beat the wider index over the medium-to-long term as a result of its new strategy.
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With Standard Chartered focusing on improving its compliance function and also on becoming more efficient, its bottom line is likely to gain a significant boost. In fact, Standard Chartered is expected to increase its earnings by as much as 136% in the next financial year. This has the potential to rapidly improve investor sentiment in the bank and with its shares trading on a forward price-to-earnings (P/E) ratio of 15.2, they appear to offer a wide margin of safety.
Shrewd move?
Similarly, buying RBS(LSE: RBS) could be a shrewd move. The part-nationalised bank may have fallen in value by 16% this year, but its financial performance is very much on the up. For example, RBS is due to increase its earnings by around 40% next year and such a rapid rate of growth means that it has a forward P/E ratio of only 11.2.
Furthermore, RBS is expected to rapidly increase dividends per share over the medium term. In fact, its yield is forecast to reach 1.5% next year and with the bank due to pay out only 16% of profit as a dividend, there's tremendous scope for a rapid rise in shareholder payouts, which could push its share price higher.
Sure of Esure
Similarly, insurance company Esure(LSE: ESUR) could become an increasingly enticing income play. Unlike RBS, it already has income appeal and is expected to yield 4.6% in the current year. However, with dividends being covered around 1.5 times by profit, there's scope for their rapid rise over the medium-to-long term.
In terms of profitability, Esure is expected to increase its bottom line by 14% in the current year and by a further 19% next year. This puts it on a PEG ratio of only 0.7 and as well as having the potential to improve investor sentiment in the stock, Esure's rapid profit rise could cause dividends to be increased at an even faster rate than they otherwise would be.
Track record
Meanwhile, fellow insurer JLT(LSE: JLT) could also beat the FTSE 100 in the long run thanks to its upbeat growth forecasts. In the current year JLT is expected to increase its earnings by 7%, with further growth of 19% forecast for next year. These figures could help to improve investor sentiment towards the company following its 13% share price fall over the last year.
This fall has, however, caused JLT to trade on a much keener valuation. It now has a PEG ratio of only 0.7 and with it having increased earnings in four of the last five years, it seems to have a relatively reliable track record of growth. When added to a yield of 3.5%, this marks JLT out as a potential FTSE 100-beating stock.
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Peter Stephens owns shares of Royal Bank of Scotland Group and Standard Chartered. The Motley Fool UK owns shares of Jardine Lloyd Thompson. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
