As Warren Buffett famously said, he'd rather buy a great company at a reasonable price than a reasonable company at a great price.
Indeed, even though the ASX has fallen by 5% in the last three months, many of the great companies are still not trading at what you would describe as rock-bottom prices.
However, there are still a number of high-quality companies trading at relatively attractive prices. Here are three that could boost your portfolio returns in the long run.
BHP Billiton Limited
Even though the price of a range of commodities has fallen in recent months, shares in BHP Billiton Limited (ASX: BHP) are still not exactly dirt cheap. Of course, a P/E ratio of 12.9 is below that of the ASX (which has a P/E ratio of 14.9), but when earnings are due to fall in the current year, it hardly screams value.
However, BHP is making strides to improve its offering to investors. As well as splitting into core and non-core entities, BHP has taken a knife to its costs and is now much more efficient than it was just a couple of years ago. As a result, it seems to be well placed to deliver higher margins and profitability moving forward.
Insurance Australia Group Ltd
Insurance Australia Group Ltd (ASX: IAG) has managed to outperform the ASX during 2014, being up 3% versus a fall of 2% for the wider index. However, there could be much more to come.
Indeed, shares in the insurer could gain in popularity if, as expected, the RBA keeps interest rates at 2.5% (or below). In this case IAG's fat, fully franked yield of 6.4% could prove to be a major attraction to yield-hungry investors, who may bid up the company's share price as a result.
With shares in IAG trading on a P/E ratio of just 11.1, there seems to be significant scope for an upward rerating over the medium to long term.
CSL Limited
While many investors will be put off by the mega-rich rating on CSL Limited's (ASX: CSL) shares, it continues to offer significant potential. Indeed, the pharmaceutical play is forecast to increase its bottom line by 14.7% per annum over the next two years, which is roughly twice the ASX's growth rate.
In addition, CSL has a strong track record of earnings growth, with profit having risen at an annualised rate of 21.4% over the last 10 years. So, while shares trade on a P/E ratio of 24.6, CSL appears to be a great company worth buying right now.
