Last week the share prices of Caltex Australia Limited (ASX: CTX), Domino's Pizza Enterprises Ltd. (ASX: DMP) and Sirtex Medical Limited (ASX: SRX) all hit new 52-week highs.
In fact, in the case of Domino's and Sirtex both stocks hit new all-time highs, while Caltex's share price is now within a whisker of its previous high which was set back in 2007 before the world was rocked by the global financial crisis (GFC).
Over both one year and ten-year time frames these three stocks have dramatically outperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) with the returns from owning Domino's and Sirtex particularly outstanding. They've delivered returns of 1,080% and 645% respectively over the past decade.
So what is the outlook like for these three stocks?
While past performance shows these stocks have thrashed the market, what matters now is what the future returns may look like….on this score the price-to-value proposition of Domino's and Sirtex doesn't look particularly appealing and this could limit the chances of future outperformance.
Domino's business outlook continues to look robust with significant opportunities for growth – however with the stock trading on a multiple of 31.4x it is hard to see value in the current price.
Sirtex also has a wonderful growth outlook and a business model which boasts impressive margins. The stock is trading on a multiple of 34x FY 2015's estimates which is obviously high, but perhaps it's justified given its quality and growth prospects.
Finally, while Caltex has the lowest growth profile, the structural changes that the company is making to its operations do position it to boost its earnings in the near term. Its market share and operations also create a defensive earnings stream for shareholders. Trading on a multiple of 15.2x, Caltex looks the most interesting in terms of the price-to-value equation.
