A low share price can offer the chance to buy low and sell high. It can sometimes mean a high yield, too.
Certainly, the future prospects and quality of the company must also be taken account. However, many investors are attracted to bargain stocks that offer them a decent income – especially while interest rates are just 2.5%.
With that in mind, here are three stocks that are priced to sell and have high yields.
Woodside Petroleum Limited
With shares in Woodside Petroleum Limited (ASX: WPL) trading on a P/E ratio of just 11.9, they are much cheaper than the ASX, which has a P/E ratio of 15.2. This divergence in rating is, however, somewhat surprising, since the future potential of Woodside is very bright.
Certainly, prospects for the oil price are set to do the company no favours, with its per barrel price expected to remain at or below $80 for a good while yet. However, with Woodside's LNG projects going from strength to strength (and demand remaining buoyant), the future could be more prosperous for the company than the market is currently pricing in.
Furthermore, with Woodside offering a fully franked yield of 6.2%, it could have income potential as well as the scope for an upward rerating over the medium term.
Scentre Group Ltd
Also trading at a discount to the ASX are shares in Scentre Group Ltd (ASX: SCG). Indeed, they have a price to book (P/B) ratio of just 0.97, which is below the ASX's P/B ratio of 1.22 and lower than the real estate sector's P/B of 1.08.
This seems difficult to justify, since Scentre is performing well and is due to increase its bottom line at an annualised rate of 7.1% over the next two years, as retailers are expected to benefit from continuing low interest rates.
Furthermore, with Scentre having a 5.9% yield (unfranked), it could see its shares make higher all-time highs in 2015, as Aussie investors bid up the price of cheap, high yield stocks that are delivering relatively consistent earnings growth.
Suncorp Group Ltd
Over the last five years, Suncorp Group Ltd (ASX: SUN) has increased dividends per share at an annualised rate of 21.3%. That's a stunning rate of growth and now means that shares in the diversified financial company offer a fully franked yield of 5.8%.
In addition, with efficiencies and cost savings yet to come through, there is the potential for rapid earnings growth over the next couple of years. This means that Suncorp trades on a PEG ratio of just 0.51 and, therefore, appears to offer growth at a very reasonable price.
Furthermore, Suncorp's P/B ratio is also more appealing than that of its sector, with the former having a P/B ratio of 1.36 and the latter (the insurance sector) having a P/B of 1.57. As a result, there could be returns generated from a revaluation, as well as from strong growth prospects and a top notch yield.
