Some investors want to find a great stock that will turn to gold as soon as they buy it. They look over charts and market reports in the hope of finding that elusive stock which will make them rich quickly.
When they find a promising company, if the share price has risen a lot already, they may think they've missed the boat and it's too expensive now.
Thinking that way may keep you out of good stocks. It's the company behind the stock that you need to focus on. A stock that has doubled in price could rise even further. When a stock's growth story indicates a stronger future, there may be more upside than you can currently see.
Over the past year the S&P ASX All Ordinaries Index (ASX: ^XAO) has gone up about 8%, which could be considered okay compared to the long-term average. Yet is that what you want – the average?
I have four stocks that smashed the index in the last 12 months and they're the kind of companies that could keep on going from there.
Retirement plans and superannuation are on many people's minds. When a company like Challenger Limited (ASX: CGF) offers investment annuities and expands into superannuation related services, it is hitting a hot finance topic and meeting big demand. Its share price has climbed over 64% since late March last year.
When people jumped onto the employment website of SEEK Limited (ASX: SEK) looking for a job a year ago, they should have googled its share price and bought some stock. It would have given them a 70%+ gain over that time.
It hit a new all-time high recently, so if you're concerned it has gone up too much, you can wait for a more advantageous price. If it can continue its strong growth trend, higher earnings may move the share price higher.
Flight Centre Travel Group Ltd (ASX: FLT) got hammered during the GFC like many other stocks, but investors who focused on the company, not the stock, were rewarded in due time. Just within the last 12 months shareholders received a share price gain of around 55%. The travel and holiday reservation company has revamped its brand, stores and online services and held its market-leader position.
The company that topped even those three is Henderson Group plc (ASX: HGG). This international fund management company left the All Ordinaries in the dust with around a 100% rise in share price in the last 12 months. Now that's really beating the market.
Foolish takeaway
Good quality companies can stand the test of time and surprise the market as well. Looking for small, speculative stocks may be a good way to find developing stories. However, medium and large companies that consistently provide products and services that customers' want can reward investors over many years, with higher share prices and solid dividends.
