Are These 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 9% so far in 2013, I believe many London-listed stocks still have much further to run, while others are overdue for a correction. So how do the following five stocks weigh up?

Hargreaves Lansdown (HL -2.18%)
I am expecting shares in Hargreaves Lansdown -- which edged to a fresh record high around 985 pence recently -- to stride to new summits amid surging activity levels.

Hargreaves Lansdown's latest quarterly update this month showed assets under management hit 35.1 billion pounds in the three months to the end of March, up 35% on an annual basis and striking record levels. Net inflows during the period also struck a record peak of 1.8 billion pounds, compared with inflows of 1 billion pounds in the same 2012 period. These pushed revenues 24% higher to 216.6 million pounds.

City forecasters put earnings per share for the year ending June 2013 at 31 pence, up 29% from the previous year. This is then expected to rise 18% in the following 12-month period to 37 pence. Further, the company operates an ultra-progressive dividend policy, and analysts expect last year's 22.6 pence full-year payout to rise to 27 pence per share in 2013 and 31 pence per share next year.

Hargreaves Lansdown currently trades on a P/E reading of 30.9 for 2013, which is anticipated to fall to 26.1 in 2014. Although this still represents a premium to a forward earnings multiple of 20.7 for the entire financial-services sector, in my opinion the prospect of further stunning earnings growth and improving dividends makes the company a great stock pick.

Schroders (SDR -0.65%)
I expect Schroders to bounce back from a difficult 2012 from this year onward as its expertise and activities spanning a plethora of asset classes and products pay off. The prospect of further merger and acquisition activity could also drive the company skyward.

Schroders saw net turnover fall 3% last year to 1 billion pounds, which in turn drove profits to 360 million pounds -- a 12% annual fall. However, new net business inflows rocketed to 9.4 billion pounds last year from 3.2 billion pounds in 2011, which in turn propelled total assets under management to a record 212 billion pounds, up more than 13% from the prior year.

EPS is expected to advance 18% in 2013 to 123 pence, according to broker estimates, before rising a further 16% next year to 143 pence. Like Hargreaves Lansdown, Schroders is also making hay in terms of building dividends, and analysts predict last year's 43 pence per-share payout to increase to rise to 49 pence per share in 2013 and 55 pence per share in 2014.

The firm currently changes hands on a P/E rating of 18.6 and 16 for 2013 and 2014 respectively, which compares favorably to the prospective earnings multiple of the listed financial-services sector. And Schroders' position as a value stock is underlined by a P/E-to-growth figure of 1.1 and 1 for this year and next, respectively. A reading around one is generally considered excellent value.

Resolution (LSE: RSL)
I reckon that life insurer Resolution is a great pick for investors seeking juicy investment income well ahead of the average yield of Britain's 100 largest quoted companies. The firm hiked last year's total dividend 6% in 2012 to 21.1 pence, and although the company said it would not raise dividends again until the surplus hits 400 million pounds, a prospective 21.1 pence per-share dividend for 2013 still provides a huge yield of 8.1%, well above the average forward yield of 3.3% for the FTSE 100.

Resolution saw its sustainable free cash surplus rise to 300 million pounds last year from 291 million pounds in 2011, and the firm's solid balance sheet should help to maintain the dividend into the medium term at least. Indeed, the company has increased dividends even in times of previous earnings pressure and raised last year's dividend even though EPS fell more than 60%.

City analysts expect EPS to rise 20% to 24 pence this year before climbing 14% to 27 pence in the following 12 months. Resolution currently trades on a P/E multiple of 11 for 2013 and 9.6 for 2014, providing a chunky discount to a forward earnings multiple of 12.8 for the entire life-insurance sector. And the company's current position as a bargain stock is borne out by a PEG readout of 0.5 for 2013 and 0.7 for 2014.

Capita (CPI -1.05%)
I am backing outsourcing giant Capita to deliver chunky new business inflows in coming years, offsetting fears over falling margins and fueling solid future expansion.

Capita announced organic growth of 3% last year, treading back to growth after the 7% drop recorded in 2011 and pushing profit before tax 10% higher to 472 million pounds. Particularly encouraging was news that contract wins doubled to 4 billion pounds last year, while Capita's sales pipeline increased to 5.2 billion pounds at the time of the results, compared with a 4.8 billion pound pipeline in November. The pipeline currently encompasses 27 separate bids with an average nine-year lifespan, providing exceptional long-term revenue visibility.

City brokers expect earnings per share to increase 6% in 2013 to 56 pence, before advancing an additional 9% in 2014 to 61 pence. In addition, investors can look forward to increasingly tantalizing dividend payments -- the firm hiked 2012's total payment 10% to 23.5 pence per share, and analysts expect this to climb to 25.6 pence per share and 27.9 pence per share in 2013 and 2014, respectively.

Capita was recently dealing on a P/E readout of 15.8 and 14.4 for 2013 and 2014 -- a positive comparison when viewed against a forward earnings multiple of 17.2 for the whole support-services sector.

Standard Life (LSE: SL)
Shares in Standard Life sprung to record peaks above 391 pence after last week's positive interims. However, I believe the stock is in danger of a heavy correction as the impact of rising competition muddies the firm's revenue outlook.

The company saw life and pensions sales on a present value of new business premium rise 24% to a record 6.3 billion pounds in the first quarter, it announced last week, helped by new legislation that has installed automatic enrollment for company pensions. However, I reckon the prospect of rivals gaining ground in the U.K. pensions and savings markets is set to weigh on prospective earnings growth further out.

EPS is set to dive 21% in 2013 to 24 pence, according to City forecasts, before snapping back 11% in the following 12-month period to 26 pence.

The company is liked by investors due to the meaty dividends on offer. Last year's 14.7 pence per-share total payment was up from 13.8 pence per share in 2011. And brokers expect this to come in at 15.6 pence per share this year and 16.6 pence per share next year, representing respective yields of 4.7% and 5%.

Standard Life was recently changing hands on a P/E ratio of 16.4 for 2013 and 14.8 for 2014 -- comfortably above the forward earnings multiple for the U.K.'s listed life-insurance sector. Considering that the firm's earnings outlook remains murky, I believe the shares are far too expensive at current levels.

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