Over the past decade, long-term investors could have made a killing by investing in those stocks that would grow rapidly over the period, dragging their share prices along with them.
The S&P/ASX 200 (Index; ^AXJO) (ASX: XJO) has advanced by 43.8%, including dividends since October 2004, but stocks like REA Group Ltd (ASX: REA) have climbed 5,000%. Even venerable stalwarts like the banks have smashed the index, with Commonwealth Bank of Australia (ASX: CBA) up 331% in the past decade.
So can these three stocks generate the types of returns investors want to beat the index?
Let's take a look….
iSentia Group Ltd (ASX: ISD)
With a market cap of $550 million, the provider of media monitoring services to thousands of customers across Australasia and Asia and has been around for more than 30 years. It may look expensive sporting a P/E ratio of 21x for the 2015 financial year, but iSentia is forecasting compound annual growth in net profit of 43.6% between 2013 and 2015.
Veda Group Ltd (ASX: VED)
The credit scoring company is even bigger than iSentia, with a market cap approaching $2 billion, and nearly double its IPO price of $1.25. On a P/E ratio basis Veda is even more expensive – 25x earnings for the 2015 financial year. But Veda is a defensive stock likely to perform in all markets, and analysts are forecasting high double-digit growth in earnings over the next couple of years. If you want quality, you sometimes might have to pay up for it.,With the shares down 4.3% today, now might be an opportunity.
Newzulu Ltd (ASX: NWZ)
An interesting company with a tiny market cap of just $19 million, Newzulu could revolutionise traditional news media. The company crowdsources news stories and has around 150,000 citizen journalists in more than 150 countries. It's even a valuable source of verifying news stories for the likes of Australian Associated Press (AAP) and a number of other well-known news sources. Newzulu is high risk and has yet to turn a profit, but that might not be far away.
I've got all three on my watchlist, and you may want to keep an eye on them as well.
