As the price of blue chips is driven up in our booming share market, investors looking to grab some bargains are left stranded. But it’s important to know that there are plenty of cheap stocks still out there and the ability to find these stocks is what makes you a smart investor.
So here are four stocks that I think offer excellent long-term prospects and trade on good prices.
1. Oil and gas producer Senex Energy Ltd (ASX: SXY) operates and develops energy resources in the bountiful Cooper Basin region. Its share price has recently taken a beating and approached 52-week lows several times, given a 38% drop in its FY14 net profit. However, its recent announcement of an asset swap with QGC will undoubtedly bring it one step closer to its FY18 production target.
Furthermore, directors who have an extra edge over investors can see Senex’s long-term potential and have recently increased their share holdings. Trading on a price-to-earnings ratio of only 14.93, Senex is a stock every smart investor should own.
2. Diversified financier FlexiGroup Limited (ASX: FXL) serves well known names such as JB HI-FI Limited (ASX: JBH) and Harvey Normal Holdings Limited (ASX: HVN). After experiencing some heavy gains in the past couple of months, FlexiGroup shares have again retreated. However, it’s important to appreciate FlexiGroup’s growth through acquisition strategy, given its recent chain of purchases. I think its most recent purchase of RentSmart is its smartest move and will give it that extra “kick” it needs for the long term. FlexiGroup’s current price of $3.49 means it trades on 11.4 times FY15’s estimated earnings.
3. Entertainment and media company Village Roadshow Ltd (ASX: VRL) is the name behind entertainment venues such as the Wet’n’Wild theme park and Happy Feet film productions. Village Roadshow has been looking to expand its geographical operations. It has recently made plans to grow in Asia and this has the potential to boost its earnings even higher. To top this off, Village Roadshow’s aim of releasing six to eight firms from its film production division helps builds the foundation for its future growth trajectory.
Its current price of $6.99 means it trades on a modest 16 times its estimated future earnings and with analysts’ forecasts for double-digit growth, Village Roadshow is a stock for a smart investor.
4. Technology company UXC Limited (ASX: UXC) is Australia’s largest locally owned IT services and solutions business. After its better-than-expected FY14 results, UXC is now thirsty for some growth. Although it experienced a 30% fall in FY14 earnings, it’s important to note that this was a result of its five most recent acquisitions impacting earnings. As the benefits from these purchases start to materialise, UXC will see a more dominant position in the technology industry. To top this off, management’s aim of doubling margins in the next few years may allow UXC to grow profits in excess of 100%.
UXC may seem overvalued given its price-to-earnings ratio of 20, but if you take into consideration its massive FY15 and FY16 growth forecasts, its current price is a bargain.
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Motley Fool contributor Aryan Norozi owns shares in UXC Limited.