Investors love blue chip pallet pooling operator Brambles Limited (ASX: BXB). In fact they don’t seem to be able to get enough of the company with investors pushing the share price up 58% over the past five years; in the process Brambles shares have outperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) by 18%.
According to Morningstar Australasia the analyst consensus forecast for Brambles’ earnings per share (EPS) for financial year (FY) 2015 is 48.6 cents per share with a dividend of 28.2 cps. Based on these forecasts the stock is trading on a price-to-earnings (PE) ratio of 19 and a yield of 3%.
Better value elsewhere
There’s no doubting the quality of Brambles’ business and that does deserve a premium, however at current prices arguably investors would be better served by casting a wider net than just blue-chip stocks. For example Virtus Health Ltd (ASX: VRT) is a leading provider of IVF treatments and is forecast to grow its EPS from 41.7 cps in FY 2014 to 50 cps in FY 2015, while also paying a dividend of 28.9 cps. With Virtus’ share price currently at $8.53 the stock is trading on a PE of 17.1 and yield of 3.4%, making it look even more appealing than Brambles.