The August reporting season told us what happened, but investors always want to know what will be the next growth engines.
Bloomberg released some earnings growth estimates that it sees in a number of sectors. Overall, it projects that the median earnings per share growth will be about 9.4% for all the sectors. I want to highlight the top four sectors which are estimated to offer earnings growth higher than the projected median. For each sector, I have chosen one candidate company with individual growth potential that could match the Bloomberg EPS growth estimate.
>> Oil and Gas (estimated sector EPS growth 22.4%)
Oil Search Limited (ASX: OSH) has just started to get higher oil revenues from its PNG LNG project as LNG export shipments begin just before the financial year close. The company is forecasting a step-change up in production that should drive earnings over the next several years. Higher cash flows will help fund further development of LNG trains and gas fields for the next stage of growth. The stock is at a 28.4 PE.
>> Consumer Goods (estimated sector EPS growth 16.4%)
JB Hi-Fi Limited (ASX: JBH), the electronics retailer reported a 10.3% gain in net profit for FY 2014. Earnings growth was partly driven by increased sales of whitegoods and appliances that are seeing a tick up in buying from the growing housing market. iPad sales were weak, yet Apple will be coming out with new products shortly, so that could reinvigorate sales for FY 2015. Its PE is 13.2 and it offers a whopping 5.1% dividend yield fully franked.
>> Technology (estimated sector EPS growth 14.9%)
In the Information Technology space, Carsales.Com Ltd (ASX: CRZ) has a plan of growing its business network internationally. Several investments in the past year have seen the company hook up with similar car sales websites in South Korea and South East Asia. It also is expanding its services into vehicle financing that can help maintain solid domestic growth. Net profit was up 14% and its PE is 27.
>> Healthcare (estimated sector EPS growth 13.2%)
Private hospital operator Ramsay Health Care Limited (ASX: RHC) reported very solid growth after a series of investments and acquisitions raised its total hospital and medical facilities to 151. Its development and renovation of existing hospitals in Australia should lead to more revenue and earnings growth. Regularly, healthcare stocks are held by investors for their defensive qualities, but this company is more like a growth stock. Long-term investors can hold onto this one, enjoy the growth now and then may be rewarded with a higher dividend yield when the company's expansion phase slows down.
