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Woolworths Limited, Telstra Corporation Ltd and BHP Billiton Limited: Should you buy?

I’ll admit it was becoming increasingly difficult to find stocks that were trading at reasonable prices when the S&P/ASX 200 (INDEXASX: XJO) was scaling fresh heights. Blue chip stocks in particular were proving tricky, especially considering many had led the charge upwards in the first place to be trading at, or near, record highs.

But the market’s recent selloff has made that task much more interesting, with some of Australia’s most popular stocks now trading at much more compelling prices. The question is do Woolworths Limited (ASX: WOW), Telstra Corporation Ltd (ASX: TLS) or BHP Billiton Limited (ASX: BHP) fit the bill?

Woolworths

Although Woolworths has recovered marginally over the last couple of trading days, its shares are still sitting well below their highs recorded in April. At $34.48, Woolworths’ shares are trading on a P/E ratio of 17.6 and offer a fully franked dividend yield of 4%. Not only is Woolworths’ supermarket division going from strength to strength, its Masters Home Improvement chain should provide growth in the years to come. While I wouldn’t go as far to say Woolworths’ shares are cheap, they appear to be reasonably priced and could definitely be considered as an investment prospect today.

Telstra

Telstra is another stock attracting plenty of attention from investors lately. The company is Australia’s biggest telecommunications provider by a country mile and is thus in a terrific position to benefit from society’s continued reliance on smart phones and broadband services, as well as from new technological revolutions such as the ‘Internet of Things’ and cloud computing. In this case, however, high quality certainly comes at a price. Despite its lucrative 5.5% fully franked dividend, investors ought to remain on the sidelines for a more attractive entry point.

BHP Billiton

An unpopular capital management decision and a plunging iron ore price have helped drag BHP Billiton’s shares down more than 15% since late August. While it has made a slight recovery in recent days, the mining giant’s shares fell to their lowest price in 15 months earlier in the week, highlighting just how volatile the sector is.

It is this volatility that makes BHP Billiton a stock to avoid right now. As much as I like the company’s long-term potential, I believe a weak iron ore price could act as further downward pressure on the stock’s price, meaning investors could be presented with an even better entry point in the near future.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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