Insurance Australia Group Ltd, Transurban Group, Slater & Gordon Limited hit new highs: Is it too late to buy?

Great profits have driven up Insurance Australia Group Ltd (ASX:IAG), Transurban Group (ASX:TCL) and Slater & Gordon Limited (ASX:SGH), but are they too high now?

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Great profit growth stocks have taken off in share price this week. Some are hitting multi-year highs not seen since before the GFC. Around the results season, market exuberance can push share prices way up, yet it may not be the best time to buy into such strength.

Regardless of the company, stocks can be overbought, so I have a rule mostly to ignore highs and wait for prices to pull back. This gives you a better understanding where true buying support is for the stock. The new buyers may be in for a quick flip and older investors may see the high price as an exit point. Don't be left holding the bag. Wait for some better pricing.

Here are three stocks that have hit new highs on a very strong earnings performance. I think there is more to come from each of them, so they shouldn't be passed over. However, waiting for a good entry point may give you a better return.

Transurban Group (ASX: TCL) had a great year of growth and acquisitions. It expanded into Brisbane by purchasing the Queensland Motorways Ltd portfolio of five toll roads and tunnels. In addition, it bought Sydney's Cross City Tunnel and is working on more toll road projects in Melbourne.

The company reported a $252.2 million full year net profit, up 44%. Full year distributions were up 12.6% to 33.1 cents per security. Toll revenues grew strongly and in FY 2015 we will see the extra revenues from the Brisbane toll roads and tunnels added, so earnings could see a boost. Toll road operating leases last for decades, so shareholders could have a reliable dividend-paying stock for many years to come. The stock offers a hefty 4.5% dividend yield partially franked.

Insurance Australia Group Ltd (ASX: IAG)

The market leader in general insurance with such brands as NRMA Insurance, CGU and SGIO is back above $6.50 a share, the first time since January 2007, which was its pre-GFC peak. Since January 2012 it has more than doubled.

FY 2014 underlying net profit rose 20.8% to $1.29 billion. This was driven by a higher insurance profit and more benign weather with less large-scale natural disasters. It bought the insurance underwriting business of Wesfarmers Ltd (ASX: WES), which should increase revenues in FY 2015. Consensus estimates forecasting growth over the next two years are mixed, so FY 2015 may be a year of integrating the new insurance business and improving financial strength.

Slater & Gordon Limited (ASX: SGH)

The company operates a network of law offices with such brands as Slater & Gordon, Trilby Misso Lawyers and Conveyancing Works in Australia, as well as Russell Jones & Walker and Claims Direct in the UK. It had a strong year of expansion and its stock just set an all-time high of $6.51.

FY 2014 net profit soared 47% to $61.1 million on top of $418.5 million in revenue. The company expands its network with acquisitions of law offices, so it can steadily grow across Australia like a chain business. However, the market may have driven the stock up too strongly, so I would not chase this one up, but wait for it to settle down before considering a position in it.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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