Santos Ltd
Although recent months have been extremely challenging, Santos Ltd (ASX: STO) remains a company with a surprisingly strong track record. For example, it has been able to increase cash flow per share at an annualised rate of 6.5% over the last 10 years, which indicates that it may be able to come through the present difficulties in slightly better shape than is currently being priced in.
Certainly, its shares could come under further pressure in the short run if the oil price falls back after its recent rally but, with Santos having the potential to boost its earnings from the majority-completed GLNG project, now could be a good time to buy a slice of it. That's especially the case since its share price has fallen by 42% in the last year and may now offer substantial upside over the medium to long term.
Amcor Limited
Shares in Amcor Limited (ASX: AMC) were firmer yesterday after the packaging major announced upbeat results. The key takeaway was the company's financial strength, with it announcing a US$500m share buyback and stating that it has the financial flexibility to pursue acquisitions worth over $2.5bn moving forward. And, with the company announcing an increase in net profit of 6.7%, it was also able to bump up the dividend by 9.2%.
As a result, its shares closed up 2.6% yesterday as investor sentiment picked up and the market looked ahead to what could turn out to be a purple patch for the business, with its diversified regional exposure having the potential to deliver relatively stable (and impressive) future results.
So, while Amcor does trade on a relatively high price to earnings (P/E) ratio of 18.9, it could still be worth buying at the present time.
Wesfarmers Ltd
Although the supermarket sector may not be the most exciting in the ASX, excellent returns are still on offer. Evidence of this can be seen by the fact that Wesfarmers Ltd (ASX: WES) has delivered a total shareholder return of 20.5% per annum during the last three years, which is impressive. Also, it could easily continue to post strong gains.
That's because Wesfarmers offers a relatively high degree of diversification, with it operating a number of successful outlets such as Coles, K-Mart and Target. As such, it could offer greater stability than some of its peers and, with the outlook for the wider economy being somewhat uncertain, investors may be willing to pay a premium for this.
So, while Wesfarmers does have a higher price to book (P/B) ratio than the ASX (1.99 versus 1.29) it could still move higher during the course of 2015.
