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WH Smith's share price has gone off the boil more recently, its market value shrinking 13% since the record peaks around £23.50 struck in the dying moments of 2017. This represents a prime buying opportunity for me.
You see, the stationer and newsagent's decision to double down on its Travel division is paying off handsomely, with sales here rising 7% in the 20 weeks to January 20 (or 3% on a like-for-like basis). This division now accounts for two-thirds of total profits and it is likely to keep rolling as international expansion continues and there are now has 249 outlets open in overseas territories.
WH Smith already has a long record of earnings growth behind it, and it is expected to keep this record rolling with rises of 5% and 7% during the years to August 2018 and 2019 respectively.
An added incentive for stock pickers comes in the form of WH Smith's ultra-progressive dividend policy. Rewards have swelled 57% during the past five years, and City analysts are expecting further hefty growth in the medium term at least.
A payment of 51.6p per share is forecast for this year, up from 48.2p in fiscal 2017. And dividends are expected to advance again to 55.8p next year. As a consequence investors can enjoy handy yields of 2.5% and 2.7% for this year and next.
All is not quite well in the garden as tough trading conditions hamper the performance of WH Smith's High Street division. Like-for-like sales here dropped 4% in the first 20 weeks of the current year.
Still, the hard work the company is undertaking to turn around this ailing division, allied with the excellent long-term revenues outlook for its Travel division as expansion continues against a backcloth of booming global traveller numbers, makes it a brilliant selection for long-term stock pickers. And I believe it is worthy of a forward P/E multiple of 18.6 times.
Booming demand for low-cost air travel means that Ryanair is another great bet for growth seekers, in my opinion.
The Irish airline has seen earnings rising by double-digit percentages recently and another meaty advance -- this time of 14% -- is chalked in by Square Mile analysts for the year ending this month. A more modest 3% rise is expected in fiscal 2019.
Ryanair isn't without its share of risk, of course, given its high fixed cost base and a backcloth of rising competition. However, in my opinion these issues are baked into the flyer's ultra-low prospective P/E ratio of 13 times.
Indeed, helped by strong economic conditions in Europe and boosted further by its route-and-airport-expansion programme -- a scheme that helped numbers jump 5% in February, to 8.6m customers -- I am confident Ryanair's revenues and profits should continue rising steadily long into the future.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended WH Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.