Although many of Australia's big blue chip stocks appear to be overpriced, there are still some great companies available at good prices. Here are five well-known companies which investors could consider adding to their portfolios at current prices.
Challenger Ltd (ASX: CGF) is the most undervalued fund manager on the ASX. Younger Australians may not be familiar with its operations, but Challenger through its Life division is the biggest supplier of annuities to Australian retirees looking to secure a stable income in their later years. It boasts a generous balance sheet, with millions in cash and a unique, but booming funds management business. It yields 3.4% at current prices.
Webjet Limited (ASX: WEB) is a household name for cheap airfares and hotels. It appears investors have overreacted to the arrival of international competitors in the local market and it has been sold off. However, Webjet continues to grow strongly in the top and bottom lines. At current prices it yields 4.3% fully franked.
Telstra Corporation Ltd (ASX: TLS) is a top income stock which has room to grow both earnings and dividends in coming years. Its Asian expansion and ability to bundle packages and network applications are key growth areas. With a huge amount of free cash, increased dividends are likely in 2015 and beyond. At $5.21 per share, it yields 5.5% fully franked.
Smaller in scale but still very well-known, Slater & Gordon Limited (ASX: SGH), recently posted a 20% lift in earnings as acquisitions in the UK were added to its half-yearly report. Its three-part growth strategy is still in its early stages and is showing promising signs for future success. It is also in the process of increasing dividends, but don't expect huge payouts whilst it pursues its acquisitive growth model. It yields 1.6% fully franked.
Property and retail giant Westfield Group (ASX: WDC) recently fell into the spotlight when it announced a split of its existing businesses. Westfield Corporation will retain the high growth international assets, such as those in the US and benefit directly from confidence returning to markets. Thanks to the clouds facing the retail sector, it trades on modest earnings multiples and could handsomely reward long-term shareholders. It yields 4.9% fully franked.
Foolish takeaway
Investing isn't always about finding the next big thing but rather making sensible investments at the right time. These companies have a reputation which precedes them and assures customers that the service is of high quality and reliable. As a result it's no wonder these companies continue to outperform their peers.
