It’s quite a mystery why Empiric Student Property (LSE: ESP) shares are so cheap right now. Rivals such as GCP Student Living and Unite Group are seeing their share prices hit record peak after record peak.
Yet this particular student accommodation provider trades at a hefty discount (7% to be exact) from its 2019 peaks set in February. And this means it boasts a bargain-basement sub-1 forward PEG ratio of 0.5, a reading that also make it much better value on paper than its two big competitors.
An ‘A-grade’ stock
Surely it’s time for the market to look again at Empiric. I reckon half-year results slated for August 20 could provide a reminder of what a cracking little profits generator it is. Booking rates have certainly remained robust (at 54% as of early May for the 2019/2020 year) as have efforts to bolster operating margins.
City analysts expect the company to deliver a 38% earnings improvement in 2019 and to follow this with a 16% rise next year. And why wouldn’t their forecasts be so sunny? As latest data from UCAS showed, enrolement numbers at UK universities continue to swell at a terrific rate and this bodes well for the providers of student digs.
One final thing. Empiric has pledged to pay a 5p per share total dividend for 2019, one which the number-crunchers agree looks more than feasible. And this means the business carries a market-beating 5.4% forward dividend yield. A similar payout is predicted for 2020 as well, making the business quite an attractive income share as well as hot growth generator, certainly in this Fool’s opinion.
Another top August buy
Empiric, however, isn’t the only splendid ‘all rounder’ I’d consider snapping up today. Marshalls (LSE: MSLH) has had no trouble on the share price front of late, up around 40% since the turn of the year. Still, I reckon it could have more ground to gain next month when interims are unveiled on August 15.
Marshalls, which provides paving and landscaping products to the construction industry, certainly blew the doors off with terrific trading details last time out in May. Back then, it advised revenues had ballooned 21% in the four months to March (or 13% excluding the contribution of its newly-acquired Edenhall brickbuilding division), a rise which reflected the underlying strength of the firm’s markets and its ability to outperform competitors.
The FTSE 250 firm’s been a dependable deliverer of double-digit profits rises in recent years but, owing to the broader troubles the construction sector’s battling because of Brexit, City brokers expect earnings expansion to slow to 7% and 6% in 2019 and 2020, respectively.
I believe, though, Marshalls’s proven resilience in these tough conditions could prompt waves of forecast upgrades should those aforementioned financials, as I fully expect, impress the market.
Regardless of whether this happens, those number-crunchers expect the landscaping leviathan to remain a stellar dividend raiser. A 15.2p per share total payout is estimated for 2019, up from 12p last year.
A 2.4% forward yield might not be as impressive for investors seeking strong and sustained dividend hikes long into the future, but I think Marshalls is still a great share to bet on.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
Motley Fool UK 2019