While it’s never easy finding top quality companies trading at reasonable prices, in the last few months it has become slightly easier. That’s because the ASX continues to deliver disappointing performance, with it now being flat for the year.
Certainly, the future seems highly uncertain at the present time, with global economic weakness, the potential for more interest rate cuts, and lower commodity prices leaving many investors feeling rather cautious regarding the prospects for their portfolios for 2015.
However, with good value on offer, now could prove to be a great time to buy and, looking ahead to 2015, these three stocks could deliver appealing share price gains over the next year.
News announced last week regarding the signing of a deal that gives Woolworths Limited (ASX: WOW) the exclusive distribution rights of the Hills brand is another step in the right direction for the business. Due to last for twenty years, the deal means that Woolworths will be able to roll out a new range of private-label laundry and hardware products under the Hills brand, both in Australia and in overseas territories, too.
The deal could stimulate Woolworths’ top line and, with shares in the company trading on a price to sale (P/S) ratio of just 0.63, they seem to offer good value for money at the present time. Certainly, recent sales numbers were slightly disappointing but, with Woolworths still offering a fully franked dividend yield of 4.6% and having the potential to benefit from a lower interest rate through higher consumer sales, it could prove to be a strong performer in 2015.
Origin Energy Ltd
Despite the lower oil price hurting sentiment in Origin Energy Ltd (ASX: ORG), the company’s bottom line is still forecast to grow at a rapid rate over the next couple of years. For example, in FY 2016, it is expected to be a whopping 80% bigger than it was in FY 2014, which is a tremendous rate of growth.
Of course, the major reason for the anticipated uplift in profitability is the commencement of major LNG projects in which Origin owns a stake. And, while the lower oil price could cause its forecast growth rate to fall somewhat, the current PEG ratio of 0.5 appears to offer sufficient flexibility to mean that Origin still offers excellent value for money even if its forward guidance is downgraded.
As a result, Origin appears to offer great value, although the short term could be somewhat challenging for shareholders – especially if the oil price remains relatively low.
It’s perhaps surprising that shares in AMP Limited (ASX: AMP) have performed so well during the course of 2014. After all, the ASX is flat year-to-date, and investor confidence is hardly at all-time highs. So, AMP’s share price rise of 29% since the turn of the year is somewhat unexpected, particularly with the wealth management company historically performing at its best during bull markets.
Of course, the changes being made by AMP are a major reason why investors are bidding up the price of its shares. Its rationalisation plans and efficiency drive look set to contribute positively to its profitability, while something of a bid premium may have worked its way into AMP’s share price, with Wesfarmers apparently seeking to expand its financial services offering over the medium term.
Although AMP has delivered exceptional capital gains this year, it still trades on a PEG ratio of just 0.53, which indicates there is still plenty of growth potential on offer for investors in the company over the next twelve months.
Where to invest $1,000 right now
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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
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Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.
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