One of the fun ways to spend breakfast on a Saturday morning (OK, this isn't everyone's idea of fun) is to scour through the share tables searching for stock ideas that could be worth further investigation.
Without a doubt, my favourite columns are the 52-week low and high columns with a particular emphasis on new highs and new lows. While I'm naturally drawn to the 'low' column for unloved and oversold bargains, there is equally likely to be a great stock with wonderful potential that could still be a great purchase basking in the spotlight of a 'new high' column.
Three leading industrial stocks that are trading near their 52-week lows and could be worth investigating further are Medibank Private Ltd (ASX:MPL), SEEK Limited (ASX:SEK) and REA Group Limited (ASX:REA).
Here's how they are currently priced based on earnings per share (EPS) data provided by Morningstar compared to the S&P/ASX 300 (Index: ^AXKO) (ASX: XKO), which is on a financial year (FY) 2015 price-to-earnings (PE) multiple of 18.2x.
- Medibank Private: Share price $2.22; 52-week low $2.08; EPS 9.7 cents per share (cps); PE 22.9x
- SEEK: Share price $16.60; 52-week low $15.17; EPS 58.6 cps; PE 28.3x
- REA Group: Share price $41.94; 52-week low $39.45; EPS 145.3 cps; PE 28.9x
Even though each of these stocks is trading near their yearly lows, their multiples are still high compared with the overall market. That could well be justified given the above average EPS growth forecast for these three companies in FY 2016. While the index is expected to record EPS growth of just 7.4% in FY 2016, Medibank, SEEK and REA are forecast to produce EPS growth of 12%, 21.7% and 24.1% respectively, which could make the current share price weakness a buying opportunity for long-term investors.
