When it comes to what the market is looking for, it's difficult to argue with a combination of great value and stunning growth prospects.
Certainly, other factors such as income, financial standing and management strategy are also important, but the market does seem to upwardly re-rate companies that can grow their bottom lines at a rapid rate and which trade at very reasonable prices.
As a result, it could be worth adding stocks that offer such a mix to your portfolio. To help get you started, here are three prime examples that could post strong gains next year.
Caltex Australia Limited
The recent update to Caltex Australia Limited's (ASX: CTX) guidance was understandably greeted with cheer by investors, with shares in the company rising by around 4% in the last couple of days alone.
That's because Caltex is now expecting to post operating profit that is up to 42% higher than it was last year, which is a superb rate of growth. The main reason for it is a slump in oil prices, which has been a major contributor to improved refining margins, with the cost of oil falling faster than product prices.
Of course, this difference is unlikely to last but, looking ahead, Caltex's marketing business seems to be making excellent progress, with it being expected to post an increase in profit of 6% for the full year.
And, with Caltex having a PEG ratio of just 0.67, its strong growth potential seems to be on offer at a great price, thereby meaning that 2015 could be a strong year for the stock.
QBE Insurance Group Ltd
While many investors are focusing on its past performance, which has been rather disappointing, the future for QBE Insurance Group Ltd (ASX: QBE) could be rather bright. That's because the company's shares continue to trade at a relatively low price despite the market forecasting stunning growth in the insurer's bottom line over the next couple of years.
For example, QBE plans to continue to dispose of non-core assets and, after recent equity and debt raisings, now has a war chest with which to deliver on its growth strategy. This strategy could set the company up for a much more profitable period and, next year, QBE is expected to post bottom line gains of around 30%.
Despite this potential, investors are not yet pricing shares in QBE for growth. Their current low PEG ratio of just 0.1 seems difficult to justify and, as a result, the insurer's share price could move higher in 2015 and beyond.
Suncorp Group Ltd
One area in which Suncorp Group Ltd (ASX: SUN) is expected to make significant progress in future is with regard to cost savings. The bank's business simplification programme is designed to streamline the firm and cut unnecessary costs from the business, which could have a massively positive impact on Suncorp's bottom line.
For example, Suncorp is forecast to post earnings growth of 74% in the current year, followed by 10% next year. Both of these growth rates are extremely attractive and, with interest rates set to move lower, the bottom line could gain an even bigger boost in 2015 than is currently being expected.
And, with shares in the bank trading on a P/E ratio of 18.1, this equates to a PEG ratio of just 0.47. As with Caltex and QBE, this indicates that growth is on offer at a great price and, as such all three stocks could have a stunning 2015.
