Two of my favourite shares on the Australian market are CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH). Whilst I think these shares ought to be considered staples in most portfolios, for some investors the lofty multiples they trade on are just too much. But not all shares trade at a premium to the market average. In fact, the three shares below can be bought at a reasonable discount to the market average. Should you buy them? G8 Education Ltd (ASX: GEM) This childcare centre operator’s shares are down almost 44% over the last six months amid concerns over…
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Whilst I think these shares ought to be considered staples in most portfolios, for some investors the lofty multiples they trade on are just too much.
But not all shares trade at a premium to the market average. In fact, the three shares below can be bought at a reasonable discount to the market average. Should you buy them?
G8 Education Ltd (ASX: GEM)
This childcare centre operator’s shares are down almost 44% over the last six months amid concerns over its falling occupancy levels and the scrapping of its medium term growth targets. This has left G8 Education’s shares trading at a lowly 13x estimated forward earnings. While this is undoubtedly cheap, I wouldn’t be in a rush to invest. Instead, I would keep a close eye on it and wait for signs that its occupancy levels are on the rise again.
Money3 Corporation Limited (ASX: MNY)
This financial services company’s shares may have hit a multi-year high today, but they still only change hands at a lowly 10x earnings. While its shares historically tend to trade on lower than average multiples, I feel a strong full-year result could lead to its shares rerating higher to a level around 12x earnings. And given the success the company is having in the secured auto loans space, I wouldn’t be surprised if Money3 surprised to the upside in FY 2018.
Super Retail Group Ltd (ASX: SUL)
Super Retail is the company behind popular retail brands including Rebel, Macpac, Supercheap Auto, and BCF. At present its shares can be picked up for just 12x estimated full-year earnings, which I think offers a compelling risk/reward. Especially if the newly acquired Macpac brand reignites its Leisure segment as management hopes. Another bonus is that Super Retail’s shares currently provide a trailing fully franked 5.5% dividend.
And while these shares may not be as cheap as the shares above, they certainly are great value for money in my opinion.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Super Retail Group Limited. The Motley Fool Australia has recommended Cochlear Ltd. 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 Scott Phillips.