When the stock market falls, it's always a highly frustrating time for investors. Those profits that had seemed so real have been replaced by losses and most investors are looking at the next few months rather than the next few years.
However, that's the time when it's possible to buy high-quality companies at even better prices. So, with that in mind, here are three stocks that have all fallen over the last month, but could prove to be profitable investments over the long term.
Woolworths Limited
Trading on a P/E ratio of 17, Woolworths Limited (ASX: WOW) hardly looks cheap. After all the ASX's P/E is considerably lower at 14.9.
However, Woolworths seems to deserve a premium to the wider market. A glance at its track record backs this up, with the company delivering stable returns over the last ten years. Indeed, earnings have risen at an annualised rate of 11.2% during the period, which bodes well for the future performance of shares in the company.
Furthermore, Woolworths could prove to be a great defensive play, too. A beta of 0.66 should keep the share price relatively steady, while a fully franked yield of 4.2% should go some way to improving investors' income prospects even if the RBA slashes interest rates yet again.
Scentre Group Ltd
Still on the retail theme, Scentre Group Ltd (ASX: SCG) offers an attractive mix of value, income and growth prospects.
For example, shares in the shopping centre owner currently have a 6% yield. Furthermore, dividend per share growth should keep up with inflation over the next couple of years, with growth of 3% per annum pencilled in.
Of course, with shopping centres being highly cyclical, Scentre has a relatively high beta of 1.31. This means that it could underperform the ASX over the short term if it continues its downward trajectory. However, with shares in the company trading at below net asset value, they seem to be cheap and have the potential to rise in value over the long run.
Commonwealth Bank of Australia
With shares in Commonwealth Bank of Australia (ASX: CBA) falling by 8% in the last month, investors could be forgiven for thinking that the bank is worth avoiding. However, it could prove to be a strong performer in the long run.
For starters, it has a fat, fully franked yield of 5.5% that is set to grow over the next couple of years (assuming a constant share price) as a result of planned dividend per share increases. In fact, Commonwealth Bank could be yielding as much as 5.9% in FY 2016.
In addition, the bank trades on a P/E ratio of 13.9, which although not particularly low on an absolute basis, seems to offer good relative value when the ASX has a P/E ratio of 14.9. As a result of this upward re-rating potential and impressive income prospects, Commonwealth Bank's future performance could be markedly better than its recent share price suggests.
