Is it too late to buy CSL Limited, GPT Group or Suncorp Group Ltd?

For shareholders in CSL Limited (ASX: CSL), GPT Group (ASX: GPT) and Suncorp Group Ltd (ASX: SUN) it’s been a pleasant start to reporting season, with all three stocks outperforming the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) over the past five days on the back of solid earnings results.

For investors who are not currently shareholders in CSL, GPT or Suncorp but are considering an investment, here are a few things to consider.

  1. CSL grew revenues by 7.7% and profits by 7.8%. The group benefited from solid demand for its plasma therapies but its earnings took a $64 million hit from litigation expenses, so reported profits actually understate adjusted earnings. With the full year dividend up 10.8% and guidance for profits to grow by 12% in the current financial year the company is in a strong position. However with the stock trading on a multiple of around 26x, the good news and quality looks to be well-and-truly accounted for.
  2. The $6.8 billion retail, office and industrial property trust GPT beat consensus earnings, reporting an interim profit after tax of $240.6 million. GPT currently has an occupancy rate of 95.6% – with the retail portfolio a highlight. GPT achieved comparable income growth of 0.3% over the half year. While the distribution was boosted by 4% to 10.5 cents, on an annualised basis this implies an unfranked yield of 5.2% which would appear a full price to pay for a property trust.
  3. Arguably banking and insurance group Suncorp reported the most exciting result out of these three large-cap stocks. Cash earnings soared 126% to $1.3 billion (102.1 cents per share), the final dividend was raised by 33% to 40 cps and a special dividend of 30 cps was also declared. Despite the solid results, growth outlook and dividends, Suncorp is trading on a price-to-earnings multiple of 12.3x which could be considered roughly fair value and offer limited upside.

A value price tag + growth + big dividends!

I'd argue you could be too late to jump on board given the pricing of these three stocks. It's annoying if you miss an opportunity to purchase a quality stock but at least it's not dangerous like buying an overvalued stock! It's just not worth the risk of overpaying for a stock when there are undervalued stocks ready and waiting to be bought...if you're after stock opportunities to buy today then make sure you discover our Top Stock. Get The Motley Fool's #1 pick now in our newly updated investment report. It's yours FREE. Simply click here for your copy of "The Motley Fool's Top Stock for 2014."

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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