BHP Billiton Limited
Investor sentiment in mining stocks such as BHP Billiton Limited (ASX: BHP) continues to be at a low ebb and, while this is disappointing in the short run, it provides investors with an opportunity to buy in at a great price.
For example, BHP now trades on a price to book (P/B) ratio of 1.95 which, although higher than the ASX's P/B of 1.3, still seems to offer excellent value for money. That's because BHP's financial standing and diversity mark it out as a high quality stock that is worthy of a premium relative to the wider index and, with its bottom line forecast to rise by 7.3% next year, it could prove to be a strong performer in the short run.
Furthermore, with BHP having a fully franked yield of 4.6%, it also offers a great income that could appeal during a low interest rate period.
Australia and New Zealand Banking Group
While Australia and New Zealand Banking Group (ASX: ANZ) does not have the most impressive earnings forecasts, with its bottom line expected to grow by 3.6% per annum over the next two years, it remains a very appealing defensive play.
For example, ANZ has a beta of just 0.9 and this means that its share price should change by just 0.9% for every 1% move in the wider ASX, thereby offering its shareholders a less volatile experience. Furthermore, ANZ also has a strong track record of bottom line growth, with it having increased its net profit at an annualised rate of 9.5% during the last five years.
This shows that, while its forecasts may not be the most impressive, it offers long term stability and, with interest rates set to move lower, its bottom line could even surprise on the upside moving forward. As such, ANZ could be worth buying at the present time.
Cochlear Limited
It's been a phenomenal year for investors in Cochlear Limited (ASX: COH), with the implantable hearing device company delivering a total shareholder return of 57.4% over the last twelve months.
That's a stunning rate of growth and has contributed to Cochlear now trading on a very high valuation. For example, it has a price to sales (P/S) ratio of 6.3, which is considerably higher than the healthcare and equipment sector's P/S ratio of 2.3.
However, Cochlear could still deliver excellent returns despite its rich valuation. That's because it has a potent mix of defensive qualities and excellent growth prospects. For example, it has a beta of just 0.5 and yet is expected to grow its bottom line by almost 36% per annum over the next two years. This combination of growth and defensive qualities could cause investor sentiment to improve even further and makes Cochlear a company worth owning at the present time.
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.
