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Is there value in REA Group Limited, Vocus Communications Limited, and Servcorp Limited shares?

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While this week’s 52-week lows were dominated by resource stocks, at the other end of the spectrum it’s a different story. Some of the S&P/ASX 200‘s best companies reached new heights this week, and it’s my bet they’ll go on to hit new heights in the coming years.

However, are they good value today? Let’s find out:

REA Group Limited (ASX: REA) – last traded at $52.32, up 15% for the year

Despite trading on a price to earnings (P/E) ratio of 34, REA Group recently featured in my article on 3 outstanding growth stocks to buy now as a result of its global diversification, low cost operations and alliance with News Corp (ASX: NWS) and iProperty Group Ltd (ASX: IPP), which REA is in the process of acquiring.

With many fertile overseas markets in which to grow its operations, I believe REA could successfully multiply in size over the next decade or more. Shares are highly priced and thinly traded as a result of News Corp’s majority ownership, which will accentuate the company’s price rises and falls.

Investors might consider building a position in parts to take advantage of these price movements. I expect REA Group shares could head higher in the near future.

Vocus Communications Limited (ASX: VOC) – last traded at $7.55, up 26% for the year

Vocus has been an outstanding success story, rising 400% in the past five years and making a lot of shareholders happy along the way. More recently, the company’s proposed merger with M2 Group Ltd (ASX: MTU) has attracted further interest from buyers, hitting a new 52-week high of $7.55 yesterday after a previous high of $6.80 on November 5.

It is tough to determine whether to buy Vocus at today’s prices or not. On one hand, the company has solid growth opportunities available to it over the long term, and on the other it is quite expensive with a P/E of 27x 2016’s earnings.

As with REA Group, investors might be better building a position in parts over time and taking advantage of price weakness.

Servcorp Limited (ASX: SRV) – last traded at $7.20, up 30% for the year

Servcorp Limited doesn’t appear in the headlines much, possibly because its global office leasing business model isn’t as exciting as others in the telecommunications or the oil industries. There’s no quibbling with the results, though, since shares are up 130% in the past five years, and profits are expected to continue growing in the future.

Management has forecast a 17% increase in Net Profit Before Tax for 2016 and growth is likely to be achieved in subsequent years as a result of money spent on expanding capacity in the current year. Trading on a P/E of 21, Servcorp doesn’t appear inordinately expensive for a stock posting double-digit earnings growth, and I expect shares will rise further from here.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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