With the way the market is looking right now, it’s getting increasingly hard to find businesses that are good value. A number of companies have turned to mergers & acquisitions to achieve earnings growth, and professional investors have started looking for spinoffs or turnaround stories.
Here are 4 companies that I think could be worth a closer look:
Wesfarmers Ltd (ASX: WES) – Wesfarmers’ doesn’t look conventionally cheap at all, especially when you consider that several of its core businesses are struggling retailers. However, it also has some very valuable businesses in Bunnings and I think the company is worth watching from a ‘sum of the parts’ perspective, for example if it elects to break up the conglomerate and spin off certain businesses.
QBE Insurance Group Ltd (ASX: QBE) – QBE Insurance looks attractive from a turnaround perspective, if you believe that the company has put its most serious problems behind it. I wrote here that QBE could be a buy as insurance prices will likely rise next year, and the company doesn’t have a demanding price tag.
Nearmap Ltd (ASX: NEA) – unprofitable aerial mapping solution provider Nearmap is a risky business, although it is well funded and continues to make headway in the USA, its primary growth market. Nearmap has very high gross margins on its software due to its scalability, and I believe that the company’s Australian business alone would justify today’s price tag. The US expansion is costly and moves the company higher up the risk scale, but the company looks like an opportunity at 59 cents.
CBL Insurance Group Ltd (ASX: CBL) (CBL CORP FPO NZX in Google Finance) – a niche insurer from New Zealand that has been expanding throughout the Eurozone and recently announced it would start writing business in the USA. CBL is more profitable than many insurers and has a diverse range of products, although it is a building insurer and thus sensitive to movements in construction activity. I think today’s price is undemanding for a company that could prove a solid investment over the long term.
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Motley Fool contributor Sean O'Neill owns shares of CBL Limited and Nearmap Ltd. The Motley Fool Australia owns shares of Nearmap Ltd. and Wesfarmers Limited. 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.