With the ASX having made strong gains in recent weeks to come back from the recent correction, sentiment among Aussie investors is much stronger than it was back in September.
Of course, not all stocks may have bright futures and it’s our job as investors to find the absolute top picks to help us retire early, pay off the mortgage, or simply enjoy a better lifestyle.
With that in mind, here are three blue chips with superb potential – all of which could be worth buying right now.
Having released a very encouraging set of first quarter sales figures that showed it is making excellent progress, Wesfarmers Ltd (ASX: WES) looks highly attractive at its current price level. A major reason for this is a price to sales ratio that is highly enticing. Indeed, it currently stands at just 0.84, which is less than the wider retail sector’s price to sales ratio of 0.97, and far lower than the ASX’s ratio of 1.57.
In addition to offering good relative value, Wesfarmers also has a superb yield that should help you to overcome the low interest rates currently on offer. Best of all, though, Wesfarmers’ 4.5% dividend yield offers returns higher than term deposits.
As a result of its strong performance, attractive valuation and top income prospects, Wesfarmers seems to be a stock worth buying.
Australia and New Zealand Banking Group
With its Super Regional Strategy now having a major impact upon its performance, Australia and New Zealand Banking Group (ASX: ANZ) seems to be on the up. Indeed, recent results showed that profit has more than doubled since the start of the GFC and is up by around 10% since last year. As a result, shares are up 45% over the last five years and there could be more to come.
That’s because ANZ still trades at a discount to the banking sector and to the wider index, with its P/E ratio being 12.8 versus 14.1 for the wider sector and 15.7 for the ASX. Therefore, an upward re-rating still looks like a very achievable outcome moving forward.
Allied to this capital growth potential is a fat, fully franked yield of 5.3%. With the RBA seemingly happy to go even lower with interest rates, that could prove to be a fillip for Aussie investors over the medium term.
Origin Energy Ltd
Sometimes the most profitable investments are undertaken when things look highly uncertain for a company or sector. That’s exactly the situation with Origin Energy Ltd (ASX: ORG), with the price of oil having collapsed by over 25% during the course of the year.
There’s also uncertainty surrounding whether Origin may have to spend more money than initially planned on the Australia Pacific LNG project, with spending currently considerably ahead of budgeted amounts.
Despite this uncertainty, Origin still trades on a hefty P/E ratio, with it currently standing at 21.6. However, when its strong growth prospects over the next two years are taken into account, it equates to a PEG ratio of just 0.65, thereby showing that Origin could be a very strong buy at the present time.
Of course, another stock that could be a stunning buy at the moment is The Motley Fool’s Top Stock For 2014-15. It’s still priced at highly attractive levels but may not be for too much longer…
The company in question offers a superb mix of income, growth and value. As a result, it could make a real difference to your bottom line and make the next few years even more profitable ones for your investments.
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Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.