Among investors, cash levels remain high. Those who gritted their teeth last year and trusted the dividend yield numbers are in most cases sitting on strong gains over the last 6 months – and the better than 19% total return for the Australia 200 Index over the same period has many investors wondering what to buy.
However, the Index is trading at 18 month highs, inducing caution. The estimated index Price to Earnings ratio around 18x also sounds a warning. On the flipside, the estimated index dividend yield around 4.4% still compares well to cash deposit rates. While some stock outlooks may attract even at elevated market levels, its likely many investors are drawing up their “shopping list” of stocks to buy on any pullback.
The following lists ARE NOT recommendations. Investors are individuals, and have different time frames, risk appetites and investment approaches. The lists are intended to provide a starting point for further investigation.
The Blue Chips
Those seeking safety in size tend to stick with the largest stocks. These are the ten stocks that most influence the Australia 200 Index:
Note how many of these are trading at P/Es well below the market average.
Most Beaten Up
These stocks are trading well below their 2012 average price. While there are good reasons for this in most cases, these are the sort of stocks “value” investors may examine:
These stocks are furthest above their 2012 average price, the sort of stocks “momentum” investors have on their radar:
Note again the number of companies on this list with lower than average P/Es.
Low P/E Stocks
Low P/Es can be an indication that investors think company earnings are about to fall, due to either company specific or industry factors. If feared events do not occur, these can become “value” stocks: