Is now the perfect time to buy Santos Ltd, Amcor Limited and Wesfarmers Ltd?

Should you add these 3 stocks to your portfolio? Santos Ltd (ASX:STO), Amcor Limited (ASX:AMC) and Wesfarmers Ltd (ASX:WES).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Santos Ltd

Although recent months have been extremely challenging, Santos Ltd (ASX: STO) remains a company with a surprisingly strong track record. For example, it has been able to increase cash flow per share at an annualised rate of 6.5% over the last 10 years, which indicates that it may be able to come through the present difficulties in slightly better shape than is currently being priced in.

Certainly, its shares could come under further pressure in the short run if the oil price falls back after its recent rally but, with Santos having the potential to boost its earnings from the majority-completed GLNG project, now could be a good time to buy a slice of it. That's especially the case since its share price has fallen by 42% in the last year and may now offer substantial upside over the medium to long term.

Amcor Limited

Shares in Amcor Limited (ASX: AMC) were firmer yesterday after the packaging major announced upbeat results. The key takeaway was the company's financial strength, with it announcing a US$500m share buyback and stating that it has the financial flexibility to pursue acquisitions worth over $2.5bn moving forward. And, with the company announcing an increase in net profit of 6.7%, it was also able to bump up the dividend by 9.2%.

As a result, its shares closed up 2.6% yesterday as investor sentiment picked up and the market looked ahead to what could turn out to be a purple patch for the business, with its diversified regional exposure having the potential to deliver relatively stable (and impressive) future results.

So, while Amcor does trade on a relatively high price to earnings (P/E) ratio of 18.9, it could still be worth buying at the present time.

Wesfarmers Ltd

Although the supermarket sector may not be the most exciting in the ASX, excellent returns are still on offer. Evidence of this can be seen by the fact that Wesfarmers Ltd (ASX: WES) has delivered a total shareholder return of 20.5% per annum during the last three years, which is impressive. Also, it could easily continue to post strong gains.

That's because Wesfarmers offers a relatively high degree of diversification, with it operating a number of successful outlets such as Coles, K-Mart and Target. As such, it could offer greater stability than some of its peers and, with the outlook for the wider economy being somewhat uncertain, investors may be willing to pay a premium for this.

So, while Wesfarmers does have a higher price to book (P/B) ratio than the ASX (1.99 versus 1.29) it could still move higher during the course of 2015.

Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »