Australian interest rates are low.
Property prices are sky high.
And the dollar has fallen hard.
Step up, the sharemarket.
It's at times like these that Australians go shopping for quality stocks on the ASX.
And three of the most topical stocks of the past 12 months have undoubtedly been Woolworths Limited (ASX: WOW), Liquefied Natural Gas Ltd (ASX: LNG) and Medibank Private Ltd (ASX: MPL).
So are they a good buy today?
Here's why you need to know about each company.
Woolworths
Woolies has recently proven to be a regular feature on news mastheads right around the country, largely thanks to the huge falls in share price over the past year. Indeed, with shares down more than 31% in the past year alone investors have become increasingly concerned about growing competition in the supermarket space. The resurgence of Coles – owned by Wesfarmers Ltd (ASX: WES) – and ongoing growth of Aldi, are both expected to squeeze Woolworths' profits margins over the medium term. However, at these levels, it's worth noting Woolworths' shares are offering a 5.6% fully franked dividend yield and a price-earnings ratio of just 13x.
Liquefied Natural Gas Ltd
Liquefied Natural Gas Ltd, or LNG Ltd, went on a wild ride in 2014 – soaring as much as 1,400%. However, 2015 has proven to be a vastly different story, with its shares already down 35%. LNG Ltd owns two prospective natural gas tolling facilities in North America. It hopes to develop these enormous projects as export terminals that will serve local gas producers seeking to transport LNG to foreign countries. However, the company still has significant work to do on the projects and with oil prices plummeting investors appear to have grown nervous – perhaps rightly so.
Medibank Private
As Australia's largest private health insurer, there's a lot to like about 2014's largest initial public offering. The owner of brands such as AHM and Medibank Private is again on track to posting a positive first full year return for shareholders following a big spike in share price in August. The positive share price reaction came on the back of strong profit growth thanks to solid profit margin expansion. However, there are now valid concerns that the 'low hanging fruit' may have been plucked by the company's management team.
Buy, Hold or Sell
Each of these companies face a unique set of risks moving forward. LNG Ltd is undoubtedly the riskiest of the three companies; investors should seriously consider the risk versus return trade-off before buying in. On the other hand, if Medibank and Woolies can find effective ways to deal with the intense competition and maintain their wide profit margins, they could certainly prove to be two companies to watch closely.
