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3 smart growth plays for 2015: Transurban Group, QBE Insurance Group Ltd and Oil Search Limited

While global growth prospects continue to be somewhat uncertain, with the European economy struggling to grow, China being forced into an interest rate cut, and the US only recently off QE ‘life support’, it’s tough to find high-quality growth stocks at the present time.

However, it’s even more difficult to find ones that trade at a great price, too.

Despite this challenge, here are three stocks that may appear rather expensive at first glance but, when their top notch growth prospects are taken into account, could turn out to be the stars of 2015.

Transurban Group

Although often viewed as a something of utility by many investors due to its high yield and reliable growth track record, toll operator Transurban Group (ASX: TCL) also offers investors a stunning forecast growth rate, too.

Indeed, the company is expected to increase its bottom line at an annualised rate of 27% over the next two years, which is over three times the ASX’s expected growth rate. And, looking further ahead, the number of cars in Australia (and across the globe) is likely to increase, thereby providing Transurban with a helpful tailwind when it comes to longer term growth, too.

With shares trading on a PEG ratio of just 1.47, it seems like a very reasonable price to pay for such strong (and reliable) growth potential. As such, shares in Transurban could continue moving upwards in 2015, having posted a rise of 19% thus far in 2014.

QBE Insurance Group Ltd

It may seem like a rather unlikely growth stock, but QBE Insurance Group Ltd (ASX: QBE) is expected to increase its earnings by 30% next year, as its new strategy continues to pay off in terms of bottom line progress.

Indeed, with non-core business lines being exited, a new management team and a more streamlined operating performance, QBE could shift investor sentiment over the medium term. Of course, this will not happen overnight, since shares in the insurer have fallen by 16% over the last three years, while the ASX is up 34% over the same time period. This highlights just how downbeat investor sentiment in the stock has become.

However, with a PEG ratio of just 0.1 and the potential for a leaner, more efficient and more profitable business over the long run, QBE could be a surprise package in 2015 and start to reverse years of disappointment for existing investors.

Oil Search Limited

While the ASX is trading on a P/E ratio of 15.3 and the energy sector has a P/E ratio of just 12.1, Oil Search Limited (ASX: OSH) has a hugely rich P/E ratio of 24. That’s 57% higher than the ASX’s rating and almost double that of the energy sector.

However, Oil Search could justify such a high P/E, since the company is forecast to grow its earnings from $0.17 per share last year to $0.62 per share next year. That works out as an annualised growth rate of around 90%, which is hugely impressive.

And, with Oil Search’s stake in the PNG LNG project set to deliver strong growth over the longer term, too, the recent fall in the oil price may not hurt the company’s share price quite as much as had been feared. After all, with such stunning growth prospects even with a lower oil price, Oil Search seems to be an excellent growth play that, with a PEG ratio of 0.27, trades at a very reasonable price.

Of course it’s tough to find high quality companies with strong growth prospects, and which trade at very attractive prices. That’s especially the case if, like most investors, you lack the time to trawl the ASX for such opportunities.

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Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

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