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Ardent Leisure Group, Dick Smith Holdings Ltd, iiNet Limited: 3 investment treats for Halloween

If knocking on the door of three houses in a row and receiving a treat from each of them is the trifecta of Halloween, then the following three stocks could very well be considered an investment trifecta!

According to analyst consensus data provided by Morningstar, Ardent Leisure Group (ASX: AAD) is forecast to grow its earnings per share in the low double digits over the next two financial years. Assuming it achieves these expectations, the stock is priced on a FY 2016 price-to-earnings (PE) ratio of 19x. This multiple is higher than the average for the S&P/ASX 300 (Index: ^AXKO) (ASX: XKO) which currently has an implied FY 2016 multiple of 16x, however given the quality of Ardent’s portfolio of entertainment and leisure assets and the long-term growth dynamics these assets should exhibit, a premium appears deserved.

Dick Smith Holdings Ltd (ASX: DSH) looks to be the pick of the bunch amongst a much maligned consumer discretionary sector. The stock price is flat since it listed almost a year ago which admittedly is a better result that its peer JB Hi-Fi Limited (ASX: JBH), which has seen its share price fall 22% over the same period. However, given the store roll-out opportunities Dick Smith has and its pricing on a multiple that is set to fall into the single-digits in FY 2017, this well-known retailer looks like it could be in the buy zone.

Like Ardent, telco iiNet Limited (ASX: IIN) appears cheap when you consider its growth profile. Morningstar’s consensus data shows expectations for approximately 15% growth per annum over the next two years, this equates to a FY 2016 PE ratio of 15x. Importantly, this growth rate is well above both the forecast average growth rate of stocks in the Telecommunication Services Sector and above S&P/ASX 300 index’s growth expectations too. What’s more, given the tailwind that the telecommunications industry is enjoying at present, it’s reasonable to argue a premium rather than a discount to the index is justified for iiNet.

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

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