One thing that many investors strive for is to beat the ASX. In fact, there is a whole industry set up to do this and, as evidenced by the results, doing so can prove to be more difficult than it looks. After all, there are a wide range of challenges and problems that can hold a company’s share price performance back.
For instance, management may have the wrong strategy, the price of the commodity the company sells may fall, the macroeconomic outlook may deteriorate, or customers find a cheaper, better quality alternative elsewhere.
However, there are a number of companies which appear to be in a strong position within their respective industries, offer great value for money, and could see investor sentiment surge so as to enable them to beat the wider index. Here are three prime examples that could be worth buying right now.
Woodside Petroleum Limited
Due to its stunning dividend yield and relative financial strength, the total return from holding Woodside Petroleum Limited (ASX: WPL) has been much stronger than for the wider energy index over the last year, with Woodside posting a minus 4.8% result. And, looking ahead, the company’s dividend yield could act as a support on its share price if commodity markets do experience a period of weakness, with Woodside forecast to yield 4.5% next year after slashing its dividend by an expected 49%.
Furthermore, Woodside’s dividend is expected to be well covered at 1.25 times and, with capital expenditure being cut significantly this year, its cash flow should also allow investor sentiment to tick up over the medium term. That’s still the case even though it trades on a higher price to book (P/B) ratio than the ASX, with Woodside having a P/B ratio of 1.53 versus 1.31 for the wider index.
Crown Resorts Ltd
Investors in Crown Resorts Ltd (ASX: CWN) may be somewhat concerned regarding the company’s guidance. After all, the casino operator is expected to see its bottom line fall from $0.88 per share to $0.74 in the current year. The key reason for this is a slowdown in demand from its Macau operations, with the soft landing of the Chinese economy apparently hurting the entire sector in the region.
However, Crown Resorts is set to recover strongly next year, with its bottom line due to surpass last year’s figure and reach $0.90. As such, the company’s share price fall in the last year (it is down 15%) offers a great opportunity to buy in at a great price, with Crown Resorts, for example, trading on a price to earnings growth (PEG) ratio of just 0.9.
Suncorp Group Ltd
Shares in Suncorp Group Ltd (ASX: SUN) have disappointed thus far in 2015, and investor sentiment may have been suppressed somewhat by the NSW thunder storms. As such, the insurance company has lagged the ASX by 13% since the turn of the year but its P/B ratio of just 1.27 could allow it to turn the tables. In fact, Suncorp’s P/B is now lower than the ASX’s, and is also considerably better value than the insurance sector’s P/B ratio of 2.16.
Furthermore, Suncorp is expected to post a rise in its bottom line of 83% between financial year 2014 and financial year 2016, which could act as a catalyst and, alongside a yield of 6.1% (fully franked), push Suncorp’s returns ahead of those of the ASX moving forward.