Is it too late to buy shares in TPG Telecom Ltd, Cochlear Limited and Challenger Ltd?

Shareholders in TPG Telecom Ltd (ASX: TPM), Cochlear Limited (ASX: COH) and Challenger Ltd (ASX: CGF) are celebrating this week as their companies hit new 52-week high milestones.

  • TPG has touched $12.38 which is not just a 52-week high but also an all-time high for the telco. The stock is up around 35% in the past year.
  • Cochlear has climbed around 40% in the past 12 months and this week the shares went as high at $122.21 which also marks an all-time high for the hearing device manufacturer.
  • Challenger has rallied up to $9.55 which takes the yearly gain close to 40% and also marks an all-time high for the financial services provider.

Too late to buy?

While investors who don’t own these three stocks will be disappointed that they have missed out on juicy returns and outperformance – the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has fallen around 8% over the last year – it’s very important to not go and blindly chase last year’s winners.

Instead, assess the stocks based on their risk versus reward today.

According to analyst consensus data published by Reuters, TPG, Cochlear and Challenger are trading on financial year 2017 price-to-earnings multiples of 25x, 32x and 14x respectively.

With growth prospects that are arguably superior to the broader market, the market multiple of roughly 20x could suggest that these three stocks could potentially still be attractive long-term investments although the premium being commanded by Cochlear could be beyond a level that a conservative investor would be comfortable paying.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. 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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