With the ASX hovering around six-year highs, you might think it's tough to find high-growth stocks at a reasonable price. Certainly, the ASX may have further to go, but finding the companies that could take it there is no easy task. With that in mind, here are three companies that not only offer superb earnings growth potential, they also trade at valuations that don't yet appear to reflect their growth prospects.
BlueScope Steel Limited
BlueScope Steel Limited (ASX: BSL) last week reported results that showed a huge improvement in the bottom line. Indeed, underlying profit increased from $7 million in the previous year to $112 million in full-year 2014. Furthermore, growth is on the agenda moving forward, with BlueScope expected to increase EPS at an annual rate of 69.7% over the next two years.
The best bit, though, is that the company's current P/E ratio doesn't appear to price in such strong growth potential. BlueScope's P/E, although relatively high at 39.2, equates to a price to earnings growth (PEG) ratio of just 0.56, which shows that upside remains on offer.
CSR Limited
Building materials company CSR Limited (ASX: CSR) has delivered exceptional gains since the turn of the year. Its shares are currently up 31% (versus 5% for the ASX) and there could be more yet to come. That's because CSR is forecast to increase its bottom line at an annualised rate of 32% over the next two years.
Certainly, some investors will be put off by the company's high rating, with CSR having a P/E of 20.8 (versus 16.2 for the ASX). However, its PEG ratio remains highly enticing at just 0.65, which indicates that shares could yet continue to push northwards over the medium term.
Western Areas Ltd
Recent results from Western Areas Ltd (ASX: WSA) showed that the company is going from strength to strength. The nickel producer has a net cash position and, perhaps more importantly, the outlook for nickel seems bright, with demand set to outstrip supply for a good while yet.
This view is reflected in Western Areas' growth forecasts, with the company's earnings all set to rise an annual rate of 84% over the next two years. Although a P/E ratio of 24 reflects this to an extent, it still means that Western Areas has a PEG ratio of just 0.29. As well as BlueScope Steel and CSR, Western Areas could be a strong performer moving forward.
