Are these 5 companies offering value or not?

Two of these companies look likely to boost your wealth in the long-term. The others could be dangerous.

| 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

With so many companies included in the S&P/ASX 200 (ASX: XJO) (^AXJO) and even more outside of the index, it’s near impossible for retail investors to accurately value each company. Many analysts will use stock screeners or filters to sort the trash from the treasure but they cannot be relied upon.

If you don’t have access to an accurate stock filter, let’s take a look at these five well-known companies and see what they have in store for retail investors.

Rio Tinto Limited (ASX: RIO) is Australia’s biggest producer of our most lucrative export, iron ore. Although it is frequently considered a “diversified” miner over 90% of earnings are derived from the steelmaking ingredient. Rio is currently in the process of ramping up production at its Pilbara mines to around 360 million tonnes per annum by 2018. However as the price of iron ore is largely dependent on Chinese economic growth, investors will have to be bullish on it as well as Rio’s ability to keep down costs and debt. Nevertheless bullish resources investors are likely finding significant value in Rio’s current share price.

Commonwealth Bank of Australia (ASX: CBA) is our biggest bank and most heavily leveraged to the Australian property market. Recently it was named: “The most expensive bank in the world by almost every measure” by UBS analysts. Since then its share price has risen further. At $76 per share, investors who choose to buy in at current prices will not be getting a bargain.

Silver Lake Resources Limited (ASX: SLR) is one of Australia’s biggest gold miners with operations in Western Australia. The company has a good cost base and rapidly increasing production, but was recently forced into a capital raising to fund the transfer of its Murchison operations to care and maintenance. Despite its recent downwards trending share price, investors could find value in it at current levels. However it should be considered a mostly speculative investment.

Senex Energy Ltd (ASX: SXY) is a junior gas producer and explorer in the Cooper Basin. After recently completing a successful drilling program, Senex looks likely to continue growing production and earnings in coming years. Its current share price of $0.71 is also extremely reasonable given it has no debt. At current prices, Senex is worthy of your watchlist and your research.

M2 Group Ltd (ASX: MTU) is the owner of Dodo, Eftel, Primus and Commander. In recent years it has relied on acquisitions and tailwinds in the telecommunications sector to drive earnings but has recently shifted its focus to organic growth. The integration of its numerous brands has created synergies within the group and management could possibly be looking at acquisitions to expand on the company’s growing electricity and gas business in the near future. M2 Group deserves a second look.

Foolish takeaway

Trying to find your way through the stockmarket can be daunting and at times difficult. To be successful it’s important to look past the ‘usual suspects’ and find companies which have bright futures ahead. Dig through annual reports and ASX announcements and understand the company in-and-out before committing your hard-earned cash to the management teams at their helm. Of these five companies, Senex Energy and M2 Group represent the best long-term value for shareholders.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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 »

asx share price competitions represented by businessmen arm wrestling
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 »

person reading news on mobile phone
⏸️ 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 »