Commonwealth Bank of Australia
On the face of it, Commonwealth Bank of Australia (ASX: CBA) is not a particularly appealing stock. After all, it trades on a rather rich valuation both on an absolute and relative basis. For example, it has a price to book (P/B) ratio of 3.01, while the ASX and the wider banking sector have P/B ratios of just 1.3 and 1.54 respectively.
However, CBA seems to be worth buying at the present time. That's because it seems to deserve its current premium when its track record is taken into account with, for example, it having increased its bottom line at an annualised rate of 11.6% during the last five years. This has allowed it to be generous with dividend increases, with them having grown by 12% per annum during the same period.
Therefore, while expensive, CBA shows that you often get what you pay for and it seems worthy of a premium to its peers over the medium term.
Woolworths Limited
Also having a very appealing track record is Woolworths Limited (ASX: WOW). For example, during the last 10 years it has been able to post earnings growth of 11.2% per annum which, when you consider that the period has included the global financial crisis is a very good result.
Furthermore, this growth rate has allowed Woolworths to increase shareholder payouts at an annualised rate of 11.6% during the same period, thereby making Woolworths a hugely enticing income play. So, while it has a price to earnings (P/E) ratio of 16.6 (versus 16.3 for the ASX), it still could make share price gains moving forward.
Newcrest Mining Limited
Although the mining sector has endured an incredibly volatile period, Newcrest Mining Limited (ASX: NCM) has largely escaped the effects of the savage price falls that have hurt many of its mining sector peers. That's because it is focused on gold mining, with its price not being hit as hard as other commodities such as iron ore in recent months.
As such, Newcrest trades on a surprisingly low beta of just 0.85, which means that its share price should (in theory) move by just 0.85% for every 1% change in the value of the ASX. As a result, Newcrest may not be a particularly volatile stock moving forward and, with it having a P/B ratio of just 1.4, it seems to offer good value for money too.
Of course, finding the best stocks for the long term is a tough task – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
