When building a portfolio, it can be a good idea to have a mixture of stocks with very different appeals.
For example, elements of growth, value and income can all be beneficial not just in terms of overall returns, but also with regard to how share prices react to changing market conditions. In other words, a mix can help you to beat the wider index, whatever the market conditions.
With that in mind, here are three stocks that could be worth buying for very different reasons.
Santos Ltd
With S&P cutting its rating to BBB, shares in Santos Ltd (ASX: STO) experienced a savage sell-off in the early part of the week. For example, shares in the oil and gas producer fell by 7% yesterday, as concerns continue regarding a lower oil price and whether the company can afford its investment in the LNG project in Queensland.
Clearly, this is a difficult time for investors in Santos, with shares being at their lowest level in around ten years. However, with the company still being forecast to post modest earnings growth in the next two years (around 3% per annum), it looks set to prevail and, in the long run, could prove to be a strong performer.
While the price of oil looks set to stay low for the short to medium term, Santos appears to offer good value at the present time. For example, its price to book ratio of just 0.73 indicates that, for longer term investors, it could be a stock worth holding.
Brambles Limited
Recent performance from Brambles Limited (ASX: BXB) has been very strong, with the pooling solutions business seeing its share price rise by 8% in the last three months.
A key reason for this is that Brambles appears to have a relatively large economic moat and, as such, provides certainty when compared to many of its index peers. For example, Brambles' pooling solutions are used across a wide range of consumer industries and, over time, it has become an integral part of the supply chain for many of its customers. As such, it would be difficult for a new entrant to compete with Brambles, which means that higher margins and consistent revenue are on offer over the long run.
Although shares in Brambles do trade on a relatively rich P/E ratio of 23.8, their PEG ratio of 1.82 seems to be good value while the ASX has a comparable ratio of 1.98.
QBE Insurance Group Ltd
With shares in Santos being cheap and Brambles offering upbeat growth prospects, QBE Insurance Group Ltd (ASX: QBE) is very much a turnaround stock. For example, it is currently going through a period of rationalisation as it seeks to become more efficient and overcome a disappointing 2013 that saw its bottom line being in the red.
The effects of this may only be fully felt over the medium to long term but, in the meantime, QBE is making large strides towards improved profitability. For instance, in FY 2014 it is expected to return to profitability and then deliver profit growth of 30% next year.
This means that QBE's dividend (which has been slashed in recent years) is forecast to rise so that, at its current share price, it is due to yield around 4.6% in 2015. Clearly, this could prove to be hugely appealing – especially if interest rates remain low – and, alongside its longer term turnaround story, it means that QBE could be a strong performer in 2015.
So, with a mix of value, growth potential, turnaround prospects and income appeal, Santos, QBE and Brambles could make a real difference to your portfolio in 2015.
