Putting together a well-performing group of stocks can be like creating a sports team. You have to have a good balance of offense and defence, with a few players built for speed (growth) and others for solid game play (dividends and defensive stocks). Throw in a couple of specialists (fast growers) and a wild card (a turnaround stock) and you just might have a winning team.
The following five stocks can play one of these roles to make up a star team and help improve your investing returns.
Grower
Carsales.Com Ltd (ASX: CRZ), the leading car sales website has kept up a steady stream of earnings growth over the past twelve months. Its overseas expansion is paying off with strong revenue increases from its Brazil and South Korea-based businesses. Full-year net profit was up 14%. Its dividend yield is 3.2% fully franked.
Fast Grower
TPG Telecom Ltd (ASX: TPM) is a telecommunications and broadband service provider. It wants to develop an alternate high-speed broadband network within urban areas to that of the National Broadband Network. It acquired ISP AAPT recently for its extensive network infrastructure. Over the past five years, earnings have risen dramatically. Analyst consensus forecasts are for a possible 19% average annual increase in earnings for the next two years.
Dividend play
Insurance Australia Group Ltd (ASX: IAG) is a general insurance company with brands like NRMA Insurance, CGU and SGIO. More benign weather in the past few years has reduced claims for natural disaster damages and losses, which opens up more potential earnings for this market leader. The stock's yield is a whopping 6.3% fully franked, higher than all the yields of the big four banks.
Defensive
Ramsay Health Care Limited (ASX: RHC) is the leading operator of private hospitals in Australia, as well as operating an international network of hospitals and medical centres. FY 2014 results were remarkable – both full year earnings and dividends up 20%. Healthcare stocks are usually good to have when the economy and market are weak and uncertain, but this one is acting like a high-growth stock.
Turnaround
Leighton Holdings Limited (ASX: LEI), the well-known engineering and construction company is going through a restructuring to streamline its business and improve margins. After a partial takeover from its majority shareholder, Germany-based Hochtief, the company has a new CEO who is committed to restructuring the company and restoring financial strength. The stock has recovered about 21% since then. The restructure will take some time, but that may give investors time to build a position as the business improves.
You don't have to rush to make a winning stock team. Slow and steady is a better strategy. You may even come across new stocks that make your portfolio more complete. For example, there is one small company that has had reliable growth and good results recently.
It would be like the rookie player – somewhat unknown but with a lot of future potential.
The Motley Fool's analysts found this small-cap stock's dividends and growth record so attractive that they dubbed it "The Top Stock of 2014 – 2015" .
They have written a free report which we're sharing with all interested investors.
If this is you, simply click on the link below and enter your email address – it takes less than 30 seconds – and we'll send it to you, completely FREE!
