2014 has been an encouraging year for the ASX, with the leading index rising by 6% since the turn of the year to recently surpass its six-year high. However, as The Motley Fool's Bruce Jackson highlighted in a recent article, the leading index reaching 8,500 points is a possibility one day. Here are three stocks that look to have strong growth prospects.
Veda Group Ltd
Veda Group Ltd (ASX: VED) has significantly outperformed the wider index recently. Its shares are up 24% since the turn of the year and the company recently released a very upbeat set of results that blew away market expectations.
Indeed, Veda is forecast to increase EPS at a rapid rate over the next couple of years, with the company's bottom line all set to rise at an annualised rate of 22.6% over the period. This is well ahead of the expected growth rate of the wider index and, despite this, Veda still appears to offer strong growth at a reasonable price.
Although its P/E ratio of 32.2 may initially put off a lot of investors, combining it with such a strong growth rate equates to a price to earnings growth (PEG) ratio of 1.43, which indicates there is more upside ahead.
PanAust Limited
Mining play PanAust Limited (ASX: PNA) also has the potential to help push the ASX to 8,500 points. It is expected to deliver twice the earnings growth rate of Veda over the next two years, with PanAust forecast to increase its bottom line at an annualised rate of 45.1% over the period.
Despite this, PanAust trades on a P/E ratio that seems to be unduly low, with the company having a rating of just 23.5. Indeed, this equates to a PEG ratio of only 0.52, which screams value and shows there could be more share price growth ahead for the company to add to its year-to-date capital gains of 24%.
Sirtex Medical Limited
Medical business Sirtex Medical Limited (ASX: SRX) recently released results that showed yet another year of strong growth, with the company having the potential to grow strongly over the medium term, depending on the outcome of clinical trials.
The trial outcomes could prove to be extremely positive for Sirtex and, looking ahead, the company is due to deliver a stunning rate of earnings growth over the next two years. For instance, EPS is expected to increase at an annualised rate of 44% over the period. As a result, while Sirtex's P/E ratio of 51 may appear high, its PEG ratio of 1.16 could mean more upside is ahead. This could help to push the ASX to the dizzy heights of 8,500 points.
