A positive long-term outlook for the aerospace market convinces me that Meggitt(LSE: MGGT) should deliver resplendent shareholder returns.
The plane-part builder saw its order book shoot 22% higher in 2016, to £1.99bn, or 3% on an organic basis. And Meggitt believes that new business should continue streaming in, noting that "the outlook for defence expenditure in the US, our single most important military market, looks more positive than it has done in recent years."
Meggitt also said that organic order growth for its defence products rose 6% last year alone. But the military segment is not the only reason for optimism, as the commercial segment also remains robust -- growth in delivery of large planes is expected to remain stable at 4% during the next half-decade, while business-jet builds are expected to rise steadily through to 2019.
The City expects 2016's 10% earnings rise to represent a watershed in Meggitt's recovery story. Additional bottom-line rises of 7% are chalked in for both 2017 and 2018. These figures result in P/E ratios of just 12.2 times and 11.5 times for this year and next, comfortably below the yardstick of 15 times that investors broadly hold as representative of attractive value.
And the aerospace ace also provides plenty of reason for dividend chasers to get excited. An expected reward of 16p per share in 2017 yields a chunky 3.7%. And the reading moves to 3.7% for next year, thanks to a predicted 16.8p dividend.
While signs of rising inflation is weighing heavily across the retail arena, I believe N Brown Group's (LSE: BWNG) expertise in specialised areas like the 'plus size' segment should make it a winner in the years ahead.
The cost of massive restructuring has seen N Brown endure many years of earnings pressure. And while the retailer's value and niche lines may protect it from the worst of falling consumer confidence in 2017, these troubles are still expected to have some effect on the bottom line in the more immediate future. Indeed, the Square Mile expects N Brown to follow an anticipated 5% earnings fall in the year to February 2017 with a 3% drop in the current period.
That said, the fashion seller is expected to get back to growth with a 3% advance in fiscal 2018. And I reckon N Brown's massive transformation drive -- a strategy that has seen it enhance brands like Jacamo and Simply Be, and embrace the fast-growing e-commerce channel with both arms -- should deliver exceptional returns in the years ahead.
As such, I believe N Brown is a steal given that it deals on P/E ratios of just 9.1 times and 8.8 times for this year and next.
And the clothing play's massive dividend yields give further reason for cheer. A predicted 14.1p per share payout for 2017 yields an astonishing 6.9%. And this edges to 7% for next year due to an expected 14.2p reward.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Meggitt. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.