Amcor Limited
With shares in Amcor Limited (ASX: AMC) trading on a price to sales (P/S) ratio of just 1.47, they seem to offer huge value for money on an absolute basis. After all, this is a company with considerable long term growth potential – especially in emerging markets across Asia.
As such, Amcor could be due for an upward rerating over the medium term and, in addition, investor sentiment could improve as a result of its impressive track record of earnings growth. For example, Amcor has increased its bottom line at an annualised rate of 8.4% over the last 10 years, which highlights its excellent potential as a long-term growth play. As a result of its value and growth appeal, it could prove to be a great buy at the present time.
Insurance Australia Group Ltd
With shares in Insurance Australia Group Ltd (ASX: IAG) having surged by 70% in the last five years, many investors may be somewhat surprised to find out that they still trade at a discount to the ASX and also to the wider insurance sector.
For example, IAG has a price to earnings (P/E) ratio of just 12.6, which is considerably lower than the P/E ratios of the ASX (15.6) and the insurance sector (17.6). As such, IAG could be due for an upward rerating revision during the course of the year, which could push its share price to all-time highs.
And, even if the mood among investors takes a downward turn, IAG could prove to be a sound defensive play. That's because it has a relatively low beta of 0.56, which means that its shares should hold up better than the ASX during a bear market.
Ramsay Health Care Limited
A quick glance at Ramsay Health Care Limited's (ASX: RHC) P/E ratio would lead most investors to understandably feel that it is overvalued and, therefore, worth avoiding as a potential investment. However, when the company's superb earnings growth forecasts are taken into account, it could lead to a very different conclusion.
For example, Ramsay is expected to increase its bottom line at an annualised rate of 18.2% over the next two years. That's a stunning rate of growth and, when it is combined with the company's P/E ratio of 33.2, equates to a price to earnings growth (PEG) ratio of just 1.82. That's considerably lower than the ASX's PEG ratio of 2.05 and indicates that, on a relative basis, Ramsay offers growth at a reasonable price.
Of course, finding the best stocks for the long term is a tough task – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
