Whatever the economic weather, however the ASX is performing, and no matter how positive the future looks for company earnings, there are nearly always stocks that are worth buying. Certainly, there are more opportune moments than others, with the middle of a recession, for example, presenting a great time to buy when blood is running in the streets. Similarly, a bubble can prove to be a poor time to pile your hard-earned cash into the stock market.
However, with interest rates on the fall, the global economic outlook being relatively positive, and the ASX still being some way off its all-time high, now looks to be a good time to add high quality stocks to your portfolio. And, with that in mind, here are three of what I think are the hottest stocks to buy at the present time.
Ramsay Health Care Limited
Despite falling by 5.7% in the last week, shares in private hospital operator, Ramsay Health Care Limited (ASX: RHC), are still up by 11% since the turn of the year. And, while they still do not appear cheap on a relative basis, with Ramsay having a price to earnings (P/E) ratio of 31.5 versus 17.1 for the ASX, they have a superb track record.
For example, over the last five years, Ramsay has increased cash flow per share at an annualised rate of 14.8% and, looking ahead, its bottom line is set to increase by 19.7% per annum over the next two years. Furthermore, with it having exposure to an improving European economy and a Chinese economy that could react positively to interest rate cuts, Ramsay's recent share price weakness could be a great opportunity to buy.
Domino's Pizza Enterprises Ltd.
It may be somewhat surprising to think of Domino's Pizza Enterprises Ltd. (ASX: DMP) as a defensive stock. However, its track record of growth and its volatility indicate that, with the ASX facing a rather uncertain future, it could be a stock that is worth owning.
For example, Domino's has a beta of just 0.82 and this means that its share price should fall by just 0.82% for every 1% drop in the value of the ASX. And, with its cash flow and earnings having risen by 18.2% and 16.8% per annum respectively during the last ten years, it appears to be a solid performer.
Furthermore, its bottom line is expected to soar at an annualised rate of 28.3% over the next two years and, with a lack of growth in numerous sectors at present, Domino's could see demand for its shares rise over the medium term.
Oil Search Limited
While a number of resources companies have struggled to come to terms with the lower oil price, Oil Search Limited (ASX: OSH) has benefitted from additional liquefied natural gas (LNG) production, and this could provide a fillip in terms of a higher income for its investors.
For example, while Oil Search has seen its bottom line rise by 24.9% per annum during the last five years, its dividends still represent just 42% of profit in the current year. Certainly, Oil Search is a company that requires significant reinvestment and, as such, will not be able to pay out as high a proportion of profit in dividends. However, there is significant scope for the company's 2% yield to rise and this could be the catalyst to push its share price higher.
