Overnight US stocks rallied to a fresh record high with the S&P 500 closing at 1,987.98. Stocks in Australia are also flying with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) less than 30 points away from its 52-week high.
As more and more individual stocks get swept up in the rally and post new highs, investors are asking themselves if certain stocks are still a buy.
Telstra Corporation Ltd (ASX: TLS ) hit a new 52-week high of $5.49 on Thursday, the stock has now risen over 10.5% in the past 12 months. With Telstra's shares now trading on a forecast price-to-earnings (PE) ratio of 16.1, the stock would appear to be close to fully valued. However low interest rates and an uncertain economic outlook are likely to play to Telstra's high fully franked dividend yield and defensive qualities. It wouldn't be surprising to see Telstra's share price climb even higher.
Suncorp Group Ltd's (ASX: SUN) shares continued their rally on Friday and by late morning had touched a new high of $14.34 which is the highest level for the stock since mid-2008. With one analyst consensus forecasting earnings per share (EPS) to increase from 76.6 cents per share (cps) in FY 2014 to 104 cps in FY 2015 – implying a FY 2015 PE of 13.8 – there could be momentum in the stock to keep the share price trending higher.
iSentia Group Ltd (ASX: ISD) recently IPO'd at $2.04 a share. This week the share price touched a new high of $2.55 making the float a standout performer. According to the prospectus, management is forecasting a profit of $27.2 million in FY 2015. With the share price running hard, the stock is now trading on a PE of 18.75. While this appears a lofty multiple, given iSentia is forecast to achieve a growth rate in profits of 57.6% in FY 2015, should investors believe strong growth in FY 2016 is also achievable, then there could still be further upside in the share price.
