A common aim of Aussie investors is to beat the ASX.
Of course, that's especially the case when it falls 6% in a month (as it has done over the last month) but, over the long run, it may be more possible than many people realise to turn in a better performance than that of the wider index.
With this in mind, here are three companies that seem to offer an attractive combination of bright long-term prospects and attractive valuations. As such, they could help you to meet your goal of beating the ASX.
Westpac Banking Corp
Despite falling by 1.5% during the course of 2014, the performance of Westpac Banking Corp's (ASX: WBC) shares is markedly better than that of the ASX. Indeed, the ASX is down 3.7% year-to-date, with Westpac's beta of 0.8 helping it to stay ahead of the wider index.
However, Westpac may move well ahead of the ASX in future. That's because it still appeals to a wide range of investors, with value investors, for instance, being attracted to its relatively enticing P/E ratio of 13.2, which compares favourably to the ASX's P/E ratio of 14.8.
Furthermore, a fully franked yield of 5.7% should keep demand from income investors buoyant, while predicted earnings growth of 4.9% per annum over the next two years shows that Westpac can deliver solid bottom line growth, too. As a result, its shares could continue their outperformance of the ASX.
Fortescue Metals Group Limited
One company that has certainly not outperformed the ASX during 2014 is Fortescue Metals Group Limited (ASX: FMG). Its shares have dropped by 40% during 2014 as a low iron ore price has hit its bottom line hard.
However, the future could be a whole lot brighter for the mining play, with earnings forecast to increase in FY 2016 by 13.3%. This puts shares in the company on a price to earnings growth (PEG) ratio of just 0.7, which highlights that growth is on offer at a reasonable price.
If that wasn't enough to help shares in Fortescue outperform the ASX, a fully franked yield of 5.1% should help to keep demand for the stock at relatively high levels.
Ramsay Health Care Limited
2014 has been a great year for investors in Ramsay Health Care Limited (ASX: RHC), with shares in the private hospital provider soaring by 12% since the turn of the year.
However, there could be much more to come. That's because Ramsay has an excellent track record of earnings growth. Indeed, over the next two years, Ramsay is due to increase earnings at an annualised rate of 17.3%. Although its PEG ratio of 1.62 may be slightly higher than many investors would like, the relatively high probability of it meeting its forecasts means that shares in the company could be worth an even bigger premium than at present. As a result, Ramsay could continue its march upwards, thereby beating the ASX over the longer term.
