National Australia Bank Ltd.
Even though shares in National Australia Bank Ltd. (ASX: NAB) trade on a relatively high valuation, they still appear to be worth buying. For example, they have a price to book (P/B) ratio of 1.99, which is much higher than the ASX's P/B ratio of 1.28. However, with excellent income prospects and the scope for an upgrade to earnings numbers due to a lower interest rate, now could be a great time to buy NAB.
For example, NAB currently yields a fully franked 5.4% and, with interest rates moving lower, this could cause the bank's shares to become more in-demand among investors. And, with dividends per share expected to rise by 5.5% per annum over the next two years, its yield could move higher over the medium term, thereby making it an even more appealing income play.
Suncorp Group Ltd
Although the cost of the Queensland cyclone could keep investor sentiment in Suncorp Group Ltd (ASX: SUN) pegged back somewhat in the short run, it remains an appealing long term investment. That's because Suncorp offers a potent mix of an excellent track record of growth, and a relatively appealing valuation.
For example, in the last five years Suncorp has delivered an annualised increase in cash flow per share of 18.2%, which is clearly impressive and bodes well for its future performance. And, with its shares trading on a P/B ratio of just 1.3, which is considerably lower than the wider insurance sector's P/B ratio of 2.14, Suncorp could see its share price move upwards over the medium term.
Insurance Australia Group Ltd
When it comes to track records of delivering improved financial figures, Insurance Australia Group Ltd (ASX: IAG) is very tough to beat. That's because, over the last five years, it has been able to deliver significant improvements to cash flow, earnings and dividends.
For example, cash flow per share has risen by 17.2% per annum, earnings per share by 43.3%, and dividends per share by 31.3% over the last five years. These are stunning rates of growth and, while the past is not an accurate guide to the future, the fact that IAG has been able to post such impressive numbers bodes well for its medium term future – even though the Queensland cyclone could hurt its net income this year. As such, it seems to be worth buying right now and holding for a significant period of 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.
