3 bargain stocks I’d buy today

In today’s market, bargain stocks are hard to find and traditional stock screening methods have been thrown off by high PE ratios and other valuation metrics.

In times like this, it’s important to stay focused on the qualities of the underlying business, its management and the opportunities within its market.

With that in mind, here are three stocks that I think are trading at bargain prices:

  • Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has significant investment holdings in a diverse group of top listed companies, most of which have significant upside in my view. For example, TPG Telecom Ltd (ASX: TPM) (25% shareholding), which has a strong management team led by David Teoh is ready to grow its revenue and challenge Telstra Corporation Ltd  (ASX: TLS) by launching a fourth mobile network. While its holding Apex Healthcare Berhad (30% shareholding) is set to benefit from the demand for healthcare in Singapore, Malaysia, Vietnam and Myanmar where it operates.
  • Commonwealth Bank of Australia (ASX: CBA) remains one of the world’s most profitable banks with its 16% ROE. Much of the downside risk from the banking royal commission appears to have been priced in and with interest rates expected to rise over the long term, CBA might be a beneficiary. A housing market crash could lead to high rates of mortgage defaults but I think population growth will likely sustain demand for housing and at worst we might see a slow down in the market. Still, at a PE of 14, CBA is not bad value.
  • Beach Energy Ltd (ASX: BPT) is one to look out for with a PE ratio of 7 and an FY 2017 ROE of 30%. Rising geopolitical risks as well as tightening efforts by OPEC and Russia could limit supply and push up demand for oil. Clean energy and electric cars may eventually lead to less demand for oil but that won’t be anytime soon in my opinion. Overall, I think this stock is a great way to gain exposure to oil prices.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of and has recommended Telstra Limited, TPG Telecom Limited, and Washington H. Soul Pattinson and Company 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.

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