Are Any of These 5 FTSE 100 Shares a Buy?

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

Although Britain's foremost share index has risen 8.9% 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?

WPP
I believe that WPP (WPP -1.64%) should maintain steady revenues growth in 2013, before shooting higher next year amid a glut of large events including the FIFA World Cup. The firm reported last month that, despite ongoing difficulties in the advertising market, that turnover grew 3.5% in 2012 to 10.4 billion pounds, in turn pushing pre-tax profit 8% higher to 1.1 billion pounds.

Furthermore, the company's restructuring work continues to reap rewards -- operating margins rose 50 basis points to 14.8% last year -- while a step-up in M&A activity should also bolster growth rates in coming years.

City analysts expect earnings per share to rise 4% in 2013, before advancing 9% in 2014. The advertising play currently trades on a price-to-earnings (P/E) ratio of 12.9 and 11.8 for this year and next, providing a discount to a figure of 13.4 for the wider media sector.

WPP is particularly attractive due to its progressive dividend policy, which it has managed to retain even in times of earnings pressure. The firm hiked its dividend 16% last year to 28.5 pence, and forecasters predict this to rise to 32.3 pence and 36.7 pence in 2013 and 2014, respectively. Decent coverage of 2.4 times, comfortably above the safety mark of 2, for these years provides assurance of further dividend growth.

HSBC Holdings
Despite severe difficulties in 2012, I expect HSBC Holdings (HSBA -0.42%) to surge higher in coming years as activity in emerging markets zooms higher. Profit before tax fell 6% in 2012 to $20.6 billion, it reported last month, mainly due to ongoing weakness in Europe.

However, pre-tax profit from its business in Hong Kong and Asia-Pacific jumped 37% and 51% during the period, to $7.6 billion and $10.4 billion, while profits in Latin America also rose 11.6% to $2.4 billion.

And activities in these areas are set to push the bank back into the black. Earnings per share are poised to surge 31% higher in 2013, according to broker forecasts, with a 12% advance expected next year.

HSBC is a favored pick among income investors due to its above-average dividend yields -- the firm is expected to increase shareholder payouts to 32.7 pence and 36.6 pence this year and next. These carry yields of 4.7% and 5.2%, respectively, compared with the 3.2% FTSE 100 average.

The bank is currently changing hands on a P/E ratio of 10.9 and 9.7 for this year and next, providing a meaty discount to a forward earnings multiple of 12.5 for the entire banking sector. And HSBC's attraction as a value stock is underlined by a miserly price/earnings to growth (PEG) readout of 0.3 and 0.8 for 2013 and 2014, respectively -- any number below 1 is classed as excellent.

Royal Dutch Shell
Like HSBC, Royal Dutch Shell (RDSB) is revered by income investors due to its juicy dividend policy. The firm is forecast to raise its dividend by 11% in 2013, to 116.4 pence, with a further hike to 119.8 pence widely anticipated.

These prospective shareholder payouts carry yields of 5.3% and 5.4%, well north of the FTSE 100 average. And dividend cover around 2.3 times for these years provides investors with peace of mind.

Shell has suffered extreme earnings pressure in recent times and reported in February that earnings on a "current cost of supplies" basis dropped to $27 billion in 2012 from $28.6 billion. However, the company has around 30 new projects under construction globally and plans to spend between $120 billion and $130 billion on capex projects up until 2015. This should secure longer-term expansion.

City brokers expect earnings per share to dip 4% this year before bouncing a modest 2% higher in 2014. The oil leviathan currently changes hands on a bargain basement P/E rating of 8.1 and 8 for this year and next, a snip compared with a forward readout of 25.6 for the wider oil and gas producers sector.

National Grid
I believe that utilities giant National Grid (NG -0.95%) should continue to provide meaty dividends to investors over the long term, a view compounded by the firm's new payout policy announced recently.

Effective from the start of April, the program that will see ordinary dividends rise "at least in line with the rate of RPI inflation" for an unlimited period. This should provide investors with assurance that no dividend cut, nor new equity issuance, would appear forthcoming.

National Grid is expected to offer a dividend of 41 pence in the year ending March 2013, according to broker estimates, up from 39.3 pence during the previous 12-month period. This is then expected to rise to 41.8 pence and 43 pence in 2014 and 2015, respectively. These payouts carry yields of 5.4%, 5.5%, and 5.7% for each of the next three years, well ahead of the average for the U.K.'s 100 largest listed companies.

In addition, National Grid also announced that 2013 results should be slightly ahead of forecast. Analysts expect earnings per share to creep 4% higher in 2013 before rising 3% and 4% in 2014 and 2015, correspondingly.

The electricity play currently trades on a P/E of 14.1, below the gas, water, and multiutilities sector's 16.7 forward average, and which is forecast to fall to 13.7 and 13.2 in 2014 and 2015.

Marks & Spencer
I am backing British shopping icon Marks & Spencer (MKS 0.31%) to bounce back from recent difficulties as it ramps up activity in red-hot emerging markets.

To mitigate enduring weakness in the U.K. and Western Europe -- sales at home rose just 0.3% in the three months to the end of December -- the company is planning to boost the number of stores in Eastern Europe, Asia, and the Middle East. It is also aiming to expand its online presence in these regions to thrust revenues higher.

City analysts expect earnings per share to drop 7% in the year ending March 2013 before bouncing back thereafter -- growth of 7% in 2014 and 8% in 2015 are anticipated. And Marks & Spencer is expected to hike its dividend over the medium term, with yields of 4.5% and 4.8% predicted in 2014 and 2015.

The retailer currently changes hands on a P/E rating of 12 for 2013, and which is set to fall to 11.3 and 10.5 in 2014 and 2015, respectively. This provides a discount to a forward earnings multiple of 18.4 for the entire general retailing sector, offering investors excellent value for their money.

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