Why GlaxoSmithKline plc And HSBC Holdings plc Can Be The FTSE 100′s Stars Of 2015!

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Shares in GlaxoSmithKline (LSE:GSK) (NYSE: GSK.US) and HSBC (LSE:HSBA) (NYSE: HSBC.US) have delivered disappointing returns during the course of 2014. They are currently down 9% and 3% since the turn of the year, and as a result, have been beaten by the FTSE 100's 2% fall this year.

However, both companies have huge potential and 2015 really could be their year. Here's why.

Restructuring

GlaxoSmithKline and HSBC are both going through periods of intense change. In the case of GlaxoSmithKline, it is currently restructuring its business and is attempting to slash £1 billion of costs over a three-year period, with around half of the savings expected to be delivered in 2016. Furthermore, the pharmaceutical major is also mulling a spin-off of a minority stake in its HIV subsidiary, ViiV Healthcare. This could increase shareholder value as ViiV is set to deliver hugely impressive growth figures moving forward, and its flotation could stimulate demand and investor sentiment in the stock.

Meanwhile, HSBC's changes are perhaps less drastic, but could also have a major impact on the business. Like GlaxoSmithKline, it is expected to focus on cost savings, especially with its operating costs rising to their highest ever level in its most recent reporting period. Furthermore, with its cost to income ratio now standing at a rather disappointing 62.5% and revenue growth being somewhat lacking, cost reduction could prove to be a key catalyst for HSBC's bottom line (and for its share price) in 2015.

Valuation

The current valuations of GlaxoSmithKline and HSBC allow the scope for significant upward reratings. For example, GlaxoSmithKline trades on a price to earnings (P/E) ratio of just 15.7, which is lower than many of its pharmaceutical sector peers, with AstraZeneca, for instance, trading on a P/E ratio of 17.1. Meanwhile, HSBC's P/E ratio of 11.7 also indicates expansion potential - especially when the FTSE 100 has a P/E ratio of 15.3.

Income Potential

GlaxoSmithKline and HSBC could also have a stunning 2015 because of their dividend yields. Indeed, with an ultra-loose monetary policy set to remain in place across the developed world throughout next year, investor demand for yields could see the share prices of high yield stocks move upwards. And, with present yields of 5.5% (GlaxoSmithKline) and 5% (HSBC), both stocks currently fall into the high yield category, meaning they could benefit from improved demand for their income prospects in 2015.

Looking Ahead

While 2014 has undoubtedly been a major disappointment for investors in GlaxoSmithKline and HSBC, next year could be much better. Both companies are making the changes necessary to stimulate their bottom lines, and to also improve investor confidence in their longer term futures, too. This could lead to an expansion in their current valuations and, with top notch yields on offer, GlaxoSmithKline and HSBC could prove to be the star performers of 2015.

Peter Stephens owns shares of GlaxoSmithKline, AstraZeneca and HSBC Holdings. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.