Suncorp Group Ltd
For investors who are looking for a mix of long term growth potential and an appealing valuation, Suncorp Group Ltd (ASX: SUN) seems to be an excellent buy at the present time. That’s because it has a superb track record of growth and yet trades at a sizeable discount to the wider insurance sector.
For example, Suncorp has been able to increase its bottom line at an annualised rate of 12.9% over the last five years, which is extremely impressive and shows that it is a company that can deliver strong growth over a sustained period. Despite this, it still trades on a very appealing valuation, with its price to book (P/B) ratio, for instance, being just 1.4 versus 2.2 for the insurance sector.
As a result of this potent mix of value and an upbeat track record of growth, Suncorp could be worth buying at the present time and has the potential to perform exceptionally well moving forward.
BHP Billiton Limited
Even though BHP Billiton Limited’s (ASX: BHP) share price has plummeted by 18% in the last six months, long-term shareholders are still sitting on some pretty impressive profits. For example, over the last 10 years BHP has delivered a total return of 7.8% per annum which, when you consider how weak commodity prices have been in recent months and their impact on the profitability of the resources sector, is a relatively strong result.
And, looking ahead, better performance could be on offer. That’s because BHP is undergoing a period of rationalisation that will see its non-core assets spun-off to a new entity called South32 and this could improve investor sentiment and add shareholder value due to improved efficiencies, a renewed focus, and potentially higher profitability.
Furthermore, with BHP trading on a price to earnings (P/E) ratio of just 14.2 right now, it seems to offer good value for money.
Even though the outlook for the Aussie economy may be somewhat brighter following the RBA’s decision to cut the interest rate by 0.25%, investors are still likely to remain somewhat nervous surrounding the medium term future of the wider economy. That’s because, as has been seen in other developed nations, even a loose monetary policy can struggle to deal with a lack of confidence and a lack of growth.
So, stocks that have a relatively defensive business model could become more in-demand. A prime example is Transurban Group (ASX: TCL), which over the last 10 years has been able to increase its cash flow per share at an annualised rate of 13.9%, while its earnings have risen by a whopping 62.6% per annum in the last five years.
And, with investors willing to pay a hefty price for such an appealing track record, Transurban’s relatively rich P/B ratio of 3.1 could expand even further during the course of the year. As such, it seems to be worth buying right now.
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 owns shares in BHP Billiton.
- Investing in cheap stocks today can help you to get rich and retire early – August 9, 2020 8:30am
- I’d take these 3 steps to get ready for another stock market crash – August 9, 2020 8:00am
- Stock market crash 2020: 3 reasons why you can still make a million – August 8, 2020 9:00am