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Are these the 3 best stocks on the ASX? AMP Limited, Origin Energy Ltd and Woodside Petroleum Limited

While there have been a number of interesting research reports written on how cost-effective and easy it is to invest in tracker funds, many investors instead choose to try and beat the ASX.

Although this is a very achievable aim, finding the most appealing stocks at a given time can prove to be a challenge. However, with there being a considerable amount of uncertainty present among investors, it’s perhaps surprising at just how much value is on offer among a number of blue-chips right now.

With that in mind, here are three stocks that could prove to be among the best buys for long-term investors at the present time.

AMP Limited

The last year has been something of a turnaround story for AMP Limited (ASX: AMP), with the wealth management company seeing its share price post strong gains following a disappointing 2013. In fact, AMP is up an impressive 21% over the last year, which easily beats the ASX’s return of just 0.5% over the same time period.

On the face of it, AMP seems to be fairly priced, since it has a price to book (P/B) ratio of 1.95, which is equal to that of the wider financials sector. However, it could be worth more than your average financial play, since it is expected to deliver above average earnings growth in the current year, with its bottom line forecast to rise by around 12% versus the prior year.

As such, AMP could be worth a premium to the wider sector and, in time, its share price could continue to rise so as to reflect this.

Origin Energy Ltd

Despite posting a bottom line that was 7% down on the prior year in financial year 2014, Origin Energy Ltd (ASX: ORG) still has a relatively impressive track record of cash flow growth over the last 10 years. That’s because it has been able to deliver annualised growth in cash flow of 12% per annum during the period, which has allowed it to increase dividends per share at an even higher rate.

However, that doesn’t mean that Origin Energy cannot afford its current level of dividends. Far from it, since the company’s dividend coverage ratio is expected to be a very healthy 1.4 times in the current year.

What it does mean, though, is that Origin Energy could be yielding as much as 6.6% in financial year 2016. And, while commodity price falls are undoubtedly a concern, it seems as though the current share price adequately reflects this risk, since even a modest reduction in forecasts would still mean that Origin Energy is a highly enticing income play.

Woodside Petroleum Limited

Despite recording record sales in 2014, Woodside Petroleum Limited (ASX: WPL) is still set to cut capital expenditure moving forward as it battles to cope with a low oil price. Indeed, asset write downs of up to $400 million for the year are being attributed to the lower oil price and, looking ahead, Woodside is now forecasting production of between 84 million and 91 million barrels of oil in 2015, down from the 95.1 million produced in 2014.

As a result, profit in 2015 is forecast to fall by around 36% lower  versus the prior year but, even so, Woodside still appears to be worth buying at the present time.

That’s because it offers a well-covered prospective yield of 5% (fully franked) and, although it trades on a forward price to earnings (P/E) ratio of 16.1, the quality of the company and its excellent financial standing mean that it could, in the long run, benefit from the challenges facing the oil industry at present. In other words, its acquisition spree could allow it to buy high quality assets at low prices, thereby allowing it to generate a higher level of profitability in future years.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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.

*Returns as of June 30th

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

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