4 stocks I like on attractive valuations

Sometimes you just have to jump on opportunities when a business is attractively priced. Warren Buffett described this as being greedy when other people are fearful.

Below are four companies that I think look attractively priced:

Collins Foods Ltd (ASX: CKF)

Collins Foods is a franchisee operator of a large number of KFC outlets around Australia.

It has been growing nicely over the last few years but it could soon go into overdrive because it’s expanding overseas. It now has a foothold in Germany and the Netherlands, I wouldn’t be surprised to see it enter more countries over the coming years.

Collins Foods is trading at 13x FY17’s estimated earnings with a grossed-up dividend yield of 4.58%.

Vocus Group Ltd (ASX: VOC)

The Vocus share price has come under further pressure over the last few weeks. I can understand that it will take some time to integrate all the different businesses that have been put together, but the sell-off has been too hard in my opinion.

Its network of fibre optic cables across Australia and in South East Asia should generate significant cashflow over the coming years, whilst demand for data continues growing.

Vocus is trading at 10x FY17’s estimated earnings with a grossed-up dividend yield of 6.06%.

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price has also been under significant pressure since TPG Telecom Ltd (ASX: TPM) announced it was going to enter the mobile market.

At $4.23 I think the market is finally recognising that the dividend could receive a hefty cut soon. However, even a 20% cut would still see the grossed-up dividend yield over 8.38%.

Telstra is trading at 13x FY17’s estimated earnings with a trailing grossed-up dividend yield of 10.5%.

Freelancer Ltd (ASX: FLN)

Freelancer is the owner of one of the most popular freelancer portals in the world.

The number of users and projects on its site is rapidly growing and it’s showing good signs on the profitability and cashflow fronts too. In a few years the business could be adding most of its additional revenue straight to its bottom line.

Freelancer isn’t yet making a statutory net profit after tax or paying a dividend.

Foolish takeaway

I think all four of these businesses are trading at attractive value. At the current prices my order of preference would be Collins Foods, then Vocus, then Freelancer and finally Telstra.

For another great stock trading at an attractive price, you should read this report prepared by our analysts.


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Motley Fool contributor Tristan Harrison 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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