2 stocks to buy now

Finding stocks on the ASX that have good long-term growth prospects and are not expensive has become increasingly more difficult over the past 12 months. However, the two stocks below offer strong long-term growth potential and are not expensive at current prices.

1. Challenger Limited

Challenger  (ASX: CGF) is an Australian investment manager that provides retirement income products. It is a clear leader in the Australian retail annuity market holding an estimated 80% market share. The company is well placed to capitalise on long-term structural growth resulting from increasing demand from retirees seeking reliable annuity income. The company also benefits from its well-known and highly regarded brand and extensive distribution network of financial advisers.

For the year ended 31 December 2013, the company saw earnings increase by 10% to $164 million. The company should see strong earnings growth over the long term as an increasing number of superannuation investors and self-funded retirees seek long and secure retirement annuity income.

Despite the share price surging by 74% over the past 12 months, I believe Challenger has room for further upside with the company trading on a low price/earnings multiple of 9 times and paying a solid dividend yield of 3.6%

2.  Seek Limited  

Seek  (ASX:SEK) is far and away the dominant online job advertising company in Australia and has been a standout performer on the ASX over the last five years, with the share price increasing by an astounding 510%. I believe the company is poised for future growth going forward.

Seek’s results for the half-year ended 31 December 2013 were outstanding. The company grew revenue by an incredible 38% and net profit by 29% to $87.4 million.

What is exciting about the company is not only the domestic business which continues to perform strongly, but the company’s overseas investments. Excess cash flow from the domestic business has allowed Seek to expand into international job websites.

Seek has invested in online job websites in developing markets with large populations and low internet penetration. These markets could represent huge long-term growth opportunities. For example, some analysts believe that Seek’s investment in Chinese job website, Zhoapin could eventually surpass the earnings of Seek’s entire Australian business. The international opportunity is best summarised by Seek having exposure to businesses that are exposed to approximately 2.5 billion people and 20% of global GDP.

Seek’s international investments are already paying huge dividends. For the half year ended 31 December 2013, Seek international was a key driver of the record result, with revenue increasing by 56% and earnings before interest, tax and depreciation increasing by 79%.

Seek trades on a price earnings multiple of 18 which is not expensive for a company with huge long-term growth opportunities.

Foolish takeaway

Both Challenger and Seek have attractive long-term growth prospects and at current prices offer good value. If Seek can successfully execute its international strategy, the potential upside in the share price is huge.

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Motley Fool contributor Bradley Murphy owns shares in Seek.

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