Wesfarmers Limited and Slater & Gordon Limited: 2 stocks that can't be ignored

Wesfarmers Limited (ASX:WES) and Slater & Gordon Limited (ASX:SGH) are at attractive prices for the growth potential they have.

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Sometimes investors just have to sit and wait for opportunities to come in stocks. One legendary stock trader, Jesse Livermore, the original "Wolf of Wall Street" who made millions during the 1929 US stock market crash said,

It never was my thinking that made the big money for me. It always was my sitting.

You can make plans, but you can't rush the market. You can be right about a stock going up, yet wrong about the timing. Some businesses just need to take time to fully develop. That's why staying in the market and holding quality stocks can be one of the safest strategies for long-term wealth.

After big moves, stocks can go sideways for a while. They have to build up momentum and investor support before they take off again. That's when you want to catch them.

Here are two stocks that I think are at that point. Because they aren't setting new highs, share prices fade down and investors move on to other "hot" stocks. That's when bargains open up.

Retail giant and business conglomerate Wesfarmers Limited (ASX: WES) has been in a trading range of $40 – $45 a share since mid-2013. Although the stock is to ready to go upwards, it just lacks the right growth catalyst to push it forward. Similar to Woolworths Limited (ASX: WOW), it is facing a tired economy, increased competition with new market entrants like Costco and Aldi and reduced consumer sentiment.

For investors this could be the quiet time when a discount is born. The consensus earnings forecast is for an annual 13% increase over the next two years. On top of that, the stock pays a very healthy 4.8% yield fully franked. Added together, the two come very close to the 19 price-earnings ratio you can buy the stock at now.

The company has sold off its insurance businesses, raising cash for new acquisitions which may be in the financial services sector, a market that could be big enough to make a difference for the $46.6 billion company. Watch the stock and start a position if you don't have it in your portfolio already.

The law firm company Slater & Gordon Limited (ASX: SGH) is another interesting and somewhat surprisingly good valued stock. It has been steadily acquiring competing law firms in both Australia and the UK and growing its network. FY 2014 was a particularly strong year with earnings up 32%.

As the new law practices are integrated into the business, more organic growth will come. The stock trades at 19 times earnings, which is at the very high end of its past PE range. Analysts are expecting earnings growth over the next several years to be around 14% annually, so with the 1.4% yield, it isn't too much of a premium to pay for long-term growth. The quality of the company will attract investors again soon enough, so have a stake in this stock as well.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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