2014 has been a pretty ordinary year for the ASX, with most of the gains from low interest rates, a falling Australian dollar and improving US economy eroded in recent weeks by collapses in the value of iron ore and oil.
Hopefully investors have steered clear of much of the turmoil, though if you were regularly adding money to the market in response to low interest rates, there's a fair chance you're in the red on some of your 2015 purchases.
Recent falls have uncovered a pile of buying opportunities for 2015, and here are four of the most compelling.
- Woolworths Limited (ASX: WOW)
The vultures (analysts) are gathering around Woolworths, with many feeling that the grocer's best days are behind it after so many successive quarters of lagging Wesfarmers Ltd's (ASX: WES) grocery performance.
Despite the fears, management reminded investors that Woolworths has a great track record of building businesses over the long term – the liquor business is a prime example – and asked for a little faith in Masters Hardware at the recent AGM.
At prices below $30, Woolworths is starting to look like an appealing long-term purchase, though investors should be cautious since I think the share price could go lower in the near term.
- Woodside Petroleum Limited (ASX: WPL)
Despite short-term weakness in the oil price thanks to the machinations of OPEC, Woodside Petroleum is an outstanding long-term purchase at current prices thanks to its size, comparatively low production costs and 'finger in every pie' development pipeline.
Analyst Morningstar believes that the weakness in oil stocks is overdone since the current production surplus is between 1.1% and 2.2% of daily consumption; furthermore, "the current pullback in stock prices is a good opportunity to buy quality companies like Woodside at a substantial discount."
- Sonic Healthcare Limited (ASX: SHL)
After a strong 2014, Sonic's entry into Canada is expected to increase revenue by 5% in 2015, with further earnings growth potential should the company successfully penetrate the Canadian market.
An initial entry into Canada also provides the opportunity to scope out competitors for future bolt-on acquisitions, expanding the company and gradually developing scale in that market as it has in so many others.
Ever-increasing foreign currency earnings are a big plus if the Australian dollar should continue to fall, however the benefits and risks are partially hedged by Sonic's practice of taking on debt in local currency where possible.
Sonic should continue to be a big winner in future years.
- Yellow Brick Road Holdings Ltd (ASX: YBR)
The smallest of the four companies in today's article, Yellow Brick Road is a growing non-bank lender and wealth management company headed up by financial guru Mark Bouris (of Wizard Home Loans and Money Magazine).
After an explosive 2014 characterised by a number of major acquisitions, a share buyback, revenue growth of 27% and increasing investment by significant shareholders, Yellow Brick Road is set to deliver its first year of profitability either this year or next – analysts are split on that one.
However at prices of just $0.57, Yellow Brick Road looks like a real bargain – I bought my stake at $0.71 – considering its rapid growth and medium-term potential.
Four great opportunities at today's prices, but there's one more company that could smash all four of these Christmas specials – The Motley Fool's Top Stock for 2015!
