Shares of telecommunications giant, Telstra Corporation Ltd (ASX: TLS), have run hard in recent times — more than doubling in the past five years alone!
Throw in its ultra-reliable interim and final dividends and an investment in Telstra shares five years ago has returned around 150% – not bad for an income stock.
However at today’s price of $6.14 per share, I’ve become a little concerned that Telstra’s share price has crept too far away from its underlying profit performance.
As I noted here, although the telco’s shares have soared over the past five years, its earnings per share haven’t keep pace. As a result its valuation has stretched significantly.
Currently trading around 18x last year’s profits, I think Telstra is currently a hold.
There are, however, many other great stocks you could consider buying today for long-term capital gains potential and dividends.
Here are two ASX stocks I’ve recently added to my family’s portfolio:
- Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) is a diversified conglomerate with strategic stakes in listed companies such as TPG Telecom Ltd (ASX: TPM) and Ruralco Holdings Ltd (ASX: RHL), as well as private businesses. Listed on the ASX for more than 100 years, WHSP has grown modestly but consistently over many years. Whilst it may currently be weighed down by its resources-sector exposure, over the long term, it looks like a horse worth backing.
- ResMed Inc. (CHESS) (ASX: RMD) is a dual-listed biotechnology company specialising in devices for treating sleep apnoea. The $US8 billion company recently had its share price crunched following an adverse trial result. However as Motley Fool writer, Regan Pearson, highlighted earlier this week, the selloff may have been overdone. At today’s prices and given ResMed’s consistent growth trajectory, I’m a happy long-term buyer.
A better stock idea than Resmed…
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Owen Raskiewicz owns shares of ResMed Inc. and Washington H. Soul Pattinson and Company Limited. Owen welcomes your feedback on Google plus (see below) or you can follow him on Twitter @ASXinvest.
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- ALL ORDINARIES finishes higher Monday: 10 shares you missed – October 30, 2017 4:44pm
- Are these the secrets behind Australia’s best ASX investors? – October 30, 2017 3:43pm
- My Aussie Share Market Investing Do’s of 2017/2018 – October 30, 2017 1:13pm