The Australian sharemarket has been on a tear so far in 2015. In just over three months, the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has surged almost 10%, taking the valuations of a number of Australia's popular stocks to fresh heights.
While shares in general mightn't be as cheap as they were at the beginning of the year, there are a number of stocks which have underperformed the market considerably in that time and could certainly be worth a look.
Stock #1
Pet supplies retailer and veterinarian Greencross Limited (ASX: GXL) is one of those companies. After having skyrocketed more than 1,500% between the beginning of 2011 and late 2014, the stock has since retreated 29% to be trading at $7.68, offering investors an excellent entry price.
Greencross, which recently acquired the City Farmers pet retail chain, currently enjoys an estimated 8% share of the local market, but is targeting 20% which it hopes to achieve by acquiring smaller businesses around the nation. The company has consistently grown earnings, while estimates suggest that that trend will continue for at least the next few years.
Stock #2
G8 Education Ltd (ASX: GEM) is another excellent bet for your money today. Like Greencross, G8 Education has delivered incredible returns in recent years thanks to its 'roll-up' strategy, but has recently pulled back in price considerably. The shares are currently trading at $3.65, up 4% for the day, but down more than 35% since September.
While the pullback in price could partially be attributed to profit-taking, it's likely that investors are also selling based on fears that the childcare centre operator could suffer as a result of new government legislation which could impact demand for places within its centres. While this is certainly a risk, it seems that the market may have sold the stock off too heavily. As such, investors who buy today could be well compensated in the long term.
Stock #3
Finally, Cover-More Group Ltd (ASX: CVO) could be another excellent opportunity for investors looking for a great deal in an otherwise expensive market. Cover-More Group, which is Australia's largest travel insurer, listed on the ASX late in 2013 and it's been a very bumpy ride since.
The latest setback has likely come as a result of a weakening Australian dollar (which investors fear could impact Australian outbound travel rates, thus impacting demand for travel insurance), as well as an earnings downgrade from its major customer, Flight Centre Travel Group Ltd (ASX: FLT).
Although these present as viable concerns for the near-term, investors seem to be ignoring the company's bright future. The stock is currently trading at $2.09 – up 2.5% for the day – and could be a great pick-up for investors focused on the long term.
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