With the S&P/ASX200 Index (ASX: XJO) (INDEX: ^AXJO) up more than 30% in the past two years alone, finding ASX stocks in 'bargain territory' is becoming harder than ever. With market heavyweights such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) reaching new highs, investors are now forced to go in search of smaller, faster growing companies.
However, that doesn't mean investors have to sacrifice on quality, as many of the ASX's best companies have market capitalisations less than $500 million. For example, Cash Converters International Ltd (ASX: CCV) has a market cap of $470 million, but brand recognition which stretches throughout Australia, New Zealand and the United Kingdom.
Cashies has taken its niche market position in second-hand goods and become a dominant player in payday loans, car finance and more. At $1.10 per share, it trades on a forward P/E ratio of 13 and 3.7% dividend, fully franked. In my opinion, Cash Converters' stock is firmly in bargain territory.
Another small financial company with strong brand recognition, good growth prospects and a healthy dividend yield is FSA Group Ltd (ASX: FSA). It trades on a trailing P/E ratio of just 7.9 and dividend yield of 4% fully franked. FSA provides individuals and small businesses with debt consolidation and cash flow services.
When interest rates (inevitably) rise, so too does demand for FSA's services. However, even in the current low interest rate environment, FSA is taking strides towards growing earnings per share and recently upped its FY14 profit after tax guidance to between 18% and 25% higher than FY13.
Lastly, diversified wealth manager and mortgage broker Yellow Brick Road Holdings Ltd (ASX: YBR) has been on my watchlist and, in my portfolio, for around a year. Despite its share price drifting sideways in that time, I believe the business is primed for significant growth in coming years. Today the company entered a trading halt, following the decision to undertake an acquisition and capital raising. However with Chairman and substantial shareholder, Mark Bouris, at its helm, you know your money is in good hands.
Our top ASX dividend stock pick – for FREE!
