Today's update from BBA Aviation(LSE: BBA) shows that the provider of global aviation support and aftermarket services is trading in line with expectations. Revenue in the first quarter of the year increased by 12% versus the prior year, with acquisitions making a hugely positive impact. Excluding acquisitions, BBA Aviation's' top line dropped by 6%. Part of the reason for this was challenging trading conditions in BBA's ASIG division, where revenue fell by 12% as contract losses and lower de-icing revenue began to bite.
Looking ahead, BBA is forecast to increase its bottom line by just 1% this year and this may lead some investors to avoid the company's shares at the present time. However, with BBA due to return to much stronger growth next year, its shares could deliver capital gains of 20%-plus. That's because BBA is due to post a rise in earnings of 18% next year and with its shares having a price-to-earnings-growth (PEG) ratio of just 0.7, there seems to be significant upside potential on offer.
Also reporting today was Hastings Group(LSE: HSTG), with the insurance company delivering strong operating performance in the three months to 31 March. Encouragingly, live customer policies increased by 17% to 2.1m, while Hastings' market share of UK private car insurance policies increased from 5.3% one year ago to 6% at the end of the period. And with net revenue rising by 22%, Hastings seems to be delivering on its targets from the IPO and looks to be well-positioned to improve on its financial performance.
With Hastings trading on a price-to-earnings (P/E) ratio of just 11.9, it seems to offer excellent value for money. That's especially the case since it's forecast to increase its bottom line by 17% next year, which could act as a positive catalyst on investor sentiment. And with Hastings having a dividend yield of 4.3% that's covered around twice by profit, its long-term outlook as an income play remains very sound. As such, 20% gains are on the cards, with Hastings having the potential to be a very strong performer in 2016 and beyond.
Meanwhile, Capital & Counties(LSE: CAPC) today reported that its strategy to deliver value creation from its two central London estates continues. The development at Covent Garden is on track to achieve an estimated rental value of £100m, while demolition to ground level at Earls Court continues to be on target with completion expected by the end of the year. With Capital & Counties having a balance sheet containing a loan-to-value ratio of just 18%, it appears to be financially sound.
While the outlook for the UK property market is somewhat uncertain, Capital & Counties appears to offer a sufficiently wide margin of safety to merit investment at the current time. It trades on a price-to-book (P/B) ratio of just 0.85 and while its shares could come under pressure in the short run due to political risk, in the long run it could prove to be a sound buy that offers over 20% upside.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.