It's hard to believe Westpac Banking Corp (ASX: WBC) laid off many staff and almost went into insolvency during 1992.
Unsurprisingly, it happened right after the last recession Australia experienced, which begun in 1990.
Since then Australia has been recession-less. Fuelled by both a housing and mining boom.
Westpac has since gone on to produce truly fantastic shareholder returns. In the past decade alone, it has achieved a compounded total shareholder return (dividends plus capital gains) (TSR) of 12.3% per year.
However, with interest rates low, investors have bid the company's stock price up to a significant level. Indeed, at today's price it trades on a price to tangible book value per share of 2.77 and P/E ratio of 13.
With analysts forecasting earnings per share growth of around 3% and a majority of the benefits derived from falling bad debts now realised, it's unlikely the "E" in P/E will expand quickly enough to justify the bank's current share price.
That's why long-term investors should look at other well-known companies to add to their portfolios.
For example, although each of Ardent Leisure Group (ASX: AAD), Village Roadshow Ltd (ASX: VRL) and Slater & Gordon Limited (ASX: SGH) appear more expensive at first glance, they're expected to grow at a much healthier rate in coming years.
Village Roadshow is popular for its ownership interests in entertainment assets such as Wet'n'Wild, Warner Bros and Movie World. It also helps produce blockbuster films such as The Great Gatsby and has achieved a compounded annual TSR of nearly 25% in the past 10 years.
Ardent Leisure is the owner of Dream World, AMF and Kingpin bowling, Goodlife Health Clubs and has a booming Main Event business in the US.
Lastly, Slater & Gordon is Australia's largest personal injury law firm, with around 25% market share. However, the group is busy growing overseas in the UK. The market is five times larger than ours and although the company holds little more than 5% of it, it is expected to account for around 45% of group EBITDA in the coming year.
Although Westpac has performed strongly over the past decade, it's expensive and lacks growth potential. Conversely all of the above three companies have strong growth potential and could be real winners moving forward.
