With the ASX having slumped by 1.7% in the last few days, it's understandable that many investors may feel slightly nervous regarding its prospects. That's especially the case since the wider Aussie economy continues to endure a disappointing period, with lower commodity prices still hurting a range of industries.
However, now could prove to be a great time to buy shares, since a number of top quality stocks are trading at appealing prices.
Here are 3 stocks that fall into that category, which I'd buy if I had a spare $10k to invest.
Domino's Pizza
A key strength of Domino's Pizza Enterprises Ltd. (ASX: DOM) is its adoption of technology. For example, it is ahead of fast-food rivals when it comes to online ordering and mobile apps. This gives it additional appeal to its target market of teenagers and 18-30 year olds, many of whom place a great deal of importance upon the ease of ordering.
In fact, this has allowed Domino's to increase its sales at an annualised rate of 12.3% during the last 10 years, which is a staggering rate of growth. And, its bottom line has performed even better, with a gain of 16.8% per annum being recorded during the same time period, as Domino's has been able to keep costs low and expand margins.
Looking ahead, strong performance is set to continue, with Domino's being forecast to grow its bottom line by 28.3% per annum during the next two years.
Wesfarmers
Although many investors are concerned about the increasing level of competition in the Aussie supermarket sector, it is worth remembering that the owner of Coles supermarkets, Wesfarmers Ltd (ASX: WES), has been able to post annualised growth in revenue of 11.3% during the last 10 years.
This has enabled Wesfarmers to increase dividends at an annualised rate of 12.5% during the last five years, which puts it on a yield of 4.5%.
Of course, a key reason why Wesfarmers is attractive at the present time is its valuation. For example, it has a price to sales (P/S) ratio of 0.83, which is much more appealing than the ASX's P/S ratio of 1.6 and the food and staples retailing sector P/S ratio of 0.99.
Commonwealth Bank of Australia
Having increased dividends per share at an annualised rate of 12% during the last five years, investors in Commonwealth Bank of Australia (ASX: CBA) may be wondering if the current dividend is sustainable. After all, it's a healthy rise over a prolonged period.
However, CBA could realistically afford to pay out an even greater dividend, since it currently has a payout ratio of 75%, which means that dividends are well-covered at 1.33 times. And, looking ahead, CBA's fat, fully franked yield of 4.6% could improve over the medium term, with dividends per share expected to rise by 6.2% per annum over the next two years.
Although CBA is not particularly cheap, with it having a price to earnings (P/E) ratio of 16.2 that is in-line with that of the ASX, and its strong financial performance makes it a buy in my opinion.
