The S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is once again back above 5,500 points – a level which was last seen back in mid-2008 as the market was plunging. The five-and-a-half year bull market has seen plenty of companies rally and in numerous cases stock prices aren't just hitting multi-year highs but they are actually hitting new, all-time highs.
While in some cases the new highs seem justified, in other cases some investors and shareholders must surely be wondering if these stocks are now too expensive to buy and whether the shares can continue to run higher.
- Ramsay Health Care Limited (ASX: RHC) has rallied 330% in the past five years and is trading on a current price-to-earnings (PE) ratio of 34.5.
- Greencross Limited (ASX: GXL) has been a stand-out performer producing share price growth of around 1,500% over five years. The stock is trading on a forecast PE ratio of 35.5.
- Navitas Limited (ASX: NVT) has rallied 184% in the past five years and is trading on a current PE of 39.3.
As highlighted here, when it comes to the fair value of a stock, the expected growth rate is an important factor. Investors in these three stocks will want to be very confident in their growth forecasts at current prices.
