2014 has been a positive year for investors in Suncorp Group Ltd (ASX: SUN), QBE Insurance Group Ltd (ASX: QBE) and Insurance Australia Group Ltd (ASX: IAG). That's because shares in the three financial stocks have outperformed the ASX's disappointing flat performance since the turn of the year.
The big question, though, is can they keep it up? Or, should you wait for a more attractive share price before buying in?
Suncorp
Shares in Suncorp have easily outperformed the ASX in 2014, being up 9% at the time of writing. However, there could be much more to come, as the company is forecast to post earnings that are 81% higher this year than they were last year, with further growth of 5.4% pencilled in for next year, too.
Indeed, despite strong share price gains, Suncorp trades on a P/E ratio of just 13.9 which, for a company that pays a fully franked yield of 5.9%, seems very reasonable. With interest rates set to stay low over the short to medium term, a high yield and growth potential could see sentiment strengthen for Suncorp and push its share price higher.
QBE
2013 was a disappointing year for QBE, with one of Australia's largest insurer's posting losses. However, the current year is set to see the company bounce back and investor sentiment has strengthened over the course of the year. Shares in QBE are up 3% year-to-date and could move higher.
That's because earnings are due to increase by almost a third next year, which puts QBE on a forward P/E ratio of just 11.5. Furthermore, with a yield of 4.3% on offer in 2015 (assuming a constant share price), QBE could continue its outperformance of the ASX moving forward.
IAG
Unlike its two peers, IAG's bottom line is due to fall slightly over the next couple of years. However, the market seems to have adequately priced this in, since shares in the company currently trade on a P/E ratio of just 11.2.
Furthermore, IAG's yield remains hugely appealing. It's currently a whopping 6.3% (fully franked) and, due to being adequately covered, dividends per share should remain fairly consistent over the next couple of years. As a result, IAG could continue to beat the ASX moving forward.
