Over the last 12 months, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has rallied to new highs as investors have pushed up the value of numerous blue-chip companies. As such, many have argued that investors should avert their focus to small-caps, which could provide portfolios with significant growth prospects.
Whilst this could very well be the case, it remains as important as ever to ensure your portfolio maintains a strong foundation and core. This doesn’t simply mean buying into the typical ‘defensive’ companies, such as the big four banks or supermarket giants Wesfarmers (ASX: WES) and Woolworths (ASX: WOW), which are currently very expensive prospects.
Instead, here are three large companies that are currently trading at attractive premiums and could strengthen your portfolio.
After having hit a high of $12.55 in May, shares in Westfield Group (ASX: WDC) have retracted back to $10.97. The company is the largest shopping centre group in the world, with stores spread through Australia, New Zealand, the US and the UK. Whilst it has been facing strong headwinds in recent times, such as poor business and consumer confidence, there has also been doubt regarding how Westfield will cope in the long run with the online retail sector growing rapidly.
However, Westfield has been strengthening its balance sheet and is exploring opportunities to expand into promising markets, such as Brazil. Based on its current price as well as its growth prospects, Westfield would be an excellent addition to your portfolio.
QBE Insurance Group (ASX: QBE) is another company that has struggled in recent years. Its profits have been down due to a large upswing in global natural disasters, as well as the resilience of the Australian dollar.
QBE is very exposed to the US market and whilst the dollar remains strong, its earnings from the Americas will be restricted. A poor half-year earnings report saw the stock fall in value considerably. As the dollar falls however, QBE’s profits will increase, making now a good time for long-term focused investors to add insurance to their portfolio.
Like QBE, Coca-Cola Amatil (ASX: CCL) released a somewhat disappointing half-year report, which gave further warning to the fact that full-year earnings may be down on last year. Coca-Cola Amatil’s brands are amongst the strongest in the world and, despite having struggled this year, they should be able to make a strong recovery in years to come. At today’s price, Coca-Cola Amatil could certainly add some fizz to your portfolio.
To deliver good results in the long term, a portfolio should consist of a good balance of strong core stocks as well as growth prospects (with the occasional speculative stock as an addition, perhaps).
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.