QBE Insurance Group Ltd
Even though QBE Insurance Group Ltd (ASX: QBE) is seemingly doing all of the right things to put itself on a firmer financial footing and deliver long-term earnings growth, investors appear unconvinced about its future prospects. Evidence of this can be seen in the fact that the company's share price has fallen by 6% since the turn of the year, which is some way behind the ASX's gain of 3% year-to-date.
However, this share price weakness could present a buying opportunity and, looking at QBE's current valuations, it's clear to see why. For example, QBE trades on a price to book (P/B) ratio of just 1.13, which is cheap on an absolute basis but appears to be even more so when you consider that the wider insurance sector has a P/B ratio of 2.1. As a result, QBE could see its rating adjusted upwards over the medium term.
National Australia Bank Ltd.
Looking back at the last five years, the earnings growth posted by National Australia Bank Ltd. (ASX: NAB) has been somewhat disappointing. That's because the bank's bottom line has increased at an annualised rate of just 2.5%, which has caused many investors to question NAB's credentials as a growth play.
However, while the past is not a guide of future performance, in NAB's case it is somewhat misleading. That's because the bank is forecast to increase its bottom line at an annualised rate of 16.7% over the next two years, which is roughly twice the expected growth rate of the wider market and shows that NAB could see investor sentiment pick up moving forward.
And, with NAB having a price to earnings growth (PEG) ratio of just 0.91, it seems to offer strong growth prospects at a reasonable price, thereby making its future as an investment a relatively bright one.
Commonwealth Bank of Australia
The last few years have been extremely rewarding for investors in Commonwealth Bank of Australia (ASX: CBA), with the bank delivering a total shareholder return of 27.4% per annum in the last three years. That's a stunning rate of return and, looking ahead, there could be more to come.
That's because CBA has an excellent track record when it comes to dividend growth and, with interest rates likely to move lower this year, this could prove to be an asset for which many investors are happy to pay during the course of the year.
For example, CBA has increased dividends per share at an annualised rate of 12% over the last five years and, although it currently trades on a price to earnings (P/E) ratio of 16.2 versus 14.5 for the wider banking sector, its share price could still move higher this year as investors seek out stocks with robust track records of dividend growth.
Of course, finding the best stocks in any sector is a tough ask – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
