Are Any of These Shares a Buy?: Gulf Keystone Petroleum, SSE, and Unilever

LONDON -- I have recently been evaluating the investment cases for a multitude of FTSE 100 companies.

Although Britain's foremost share index has risen 8.4% so far in 2013, I believe many London-listed stocks still have much further to run, while conversely others are overdue for a correction. So how do the following five stocks weigh up?

Gulf Keystone Petroleum
Despite Gulf Keystone Petroleum's mammoth 1.6 million pound cap, the firm is currently listed on the London Stock Exchange's AIM index rather than the FTSE 100. The company holds a raft of promising oil assets in the Middle East, although I would advise investors to stay their hand until the results of its long-standing litigation battle is known.

Shares have trained gradually lower in recent months as fears surrounding its ongoing litigation with Excalibur Ventures drags along. The latter has claimed up to 30% of Gulf Keystone's massive oil assets in Kurdistan, Iraq, in a legal battle that has been roiling since mid-2011.

A decision on the matter is expected some time in the summer, and I expect a ruling in Gulf Keystone's favor will blast share prices higher, with positive drilling results in recent times underlining its excellent growth prospects.

In February, testing at its Bakrman-1 exploration well yielded another discovery at the Akri-Bijeel Block in Kurdistan, while it is also due to ramp up exploration and development work at the gargantuan Shaikan oil field in coming months.

I am backing electricity provider SSE to remain a stellar pick among income investors owing to its juicy dividend policy. And stakeholders can be confident of future payout rates due to its ultra-defensive operations in the utilities sector.

SSE's projected dividend yield of 5.8% for the year ending March 2013 remains well north of the 3.5% FTSE 100 average, and forecasters expect this to advance to 6% and 6.3% in 2014 and 2015, respectively. The firm continues to build chunky shareholder payouts, with 2012's dividend of 80.1 pence expected to rise to 84.4 pence, 88.2 pence, and 92 pence in the following three years.

City analysts expect earnings per share to accelerate over the medium term, with growth of 1% in 2013 projected to increase 3% next year and 8% in 2015.

The company is changing hands on a price-to-earnings (P/E) ratio of 13.1 for the current year, but it is expected to fall to 12.7 and 11.8 in 2014 and 2015, respectively, which I consider a decent value given steady earnings growth estimates and rising shareholder payouts.

TUI Travel
Travel operator TUI Travel provides excellent growth prospects owing to its rising market share in Britain and key European markets and increasing activity through its online platform.

In its February update, the firm advised that it had shifted almost a third of its mainstream summer holiday packages already, with summer 2013 bookings in the U.K. and Nordic regions up 9% and 10% on year, respectively.

City brokers anticipate earnings per share to rise 7% in the year ending Sept. 2013, before striding 9% higher the following year. TUI Travel currently changes hands on a P/E rating of 11.2 and 10.3 for this year and next, representing a discount to a forward readout of 15 for the wider travel and leisure sector.

A juicy dividend yield in excess of the FTSE 100 average sweetens the investment case -- yields of 3.9% and 4.3% are expected in 2013 and 2014, respectively. And shareholder payouts are protected with coverage of 2.2 times for both of these years, north of the generally regarded safety watermark of 2.

I am backing shares in national broadcaster ITV to continue marching higher, as the rewards from its extensive restructuring in recent years continues to deliver solid earnings growth.

The firm announced in February that revenues rose 3% in 2012 to 2.2 billion pounds, which in turn drove earnings before interest, taxes, and amortization 13% higher to 520 million pounds. ITV has displayed remarkable resilience in the face of insipid growth in TV advertising, with its online and content divisions stepping in to deliver plump rewards.

Still, I expect television revenues to rise from the summer onwards as competition from the pay-TV and broadband segments heats up, prompted by BT Group's aggressive challenge to rival British Sky Broadcasting as a multiservice provider.

ITV's earnings per share are predicted to rise 11% this year, according to City brokers, before advancing an additional 8% in 2014. The company is currently trading on a P/E ratio of 12.6 and 11.8 for this year and next, which compares favorably with a figure of 13.4 for the media sector.

I believe that Unilever remains on course to deliver solid earnings growth over the long term. The company saw groupwide sales leap 10.5% in 2012 to 51.3 billion euros, it announced last month, which propelled net profit 7% higher to 4.9 billion euros.

Its portfolio of famous brands -- which include Dove, Hellmann's, and Flora -- carry considerable pricing power, which, combined with cost-cutting measures and an improving product mix, continue to push margins higher. Core operating margins rose by 30 basis points last year to 13.8%. Also, revenues from developing markets continue to surge and now make up more than 55% of total group turnover.

City forecasters expect earnings per share to rise 4% and 9% in 2013 and 2014, respectively. In addition, juicy dividend yield projections of 3.1% and 3.4% are offered this year and next, and the firm's dividend-building policy should yield larger shareholder payouts further out.

Although Unilever presently trades on a P/E multiple of 19.3 and 17.7 for this year and next, far ahead of the 11.9 average for the food producers and processors sector, I believe that the quality of its brands and businesses, and increasing exposure to lucrative emerging markets, justifies this premium.

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Royston Wild does not own shares of any of the companies mentioned in this article. The Motley Fool recommends Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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