For most investors, there is nothing more exciting than a positive surprise. It can be with regard to economic data, company results, dividend growth, or anything that unexpectedly pushes higher the prices of stocks we own.
Clearly, not all stocks can surprise on the upside all of the time but, with many investors being pretty downbeat right now, there is the potential for positive surprises this year.
With that in mind, here are three companies that could deliver better share price performance than is currently being priced in.
BHP Billiton Limited
It's understandable that investor sentiment towards commodity stocks such as BHP Billiton Limited (ASX:BHP) is at a low ebb right now. After all, the collapse in the price of commodities such as iron ore and oil have hit their bottom lines hard and could lead to asset write downs over the medium term.
However, in BHP's case, it seems to offer the potential for a positive surprise this year. That's because its share price has fallen by 25% over the course of the last year and this has left its shares offering excellent value for money.
Evidence of this can be seen in BHP's yield of 5.2% which, when you consider that it pays out just 48% of profit as a dividend, seems to be rather generous. As a result, shares in BHP could deliver strong growth through the rest of the year.
Coca-Cola Amatil Ltd
Shares in Coca-Cola Amatil Ltd (ASX: CCL) have had a disappointing year, being down 24% during the period. That's been at least partly due to pricing pressures and a significant write down that hurt earnings last year, with them being down over 10% versus the prior year.
Looking ahead, though, Coca-Cola Amatil could make back much of the fall in its share price, since it remains a top notch income play. For example, it now yields a very desirable 5.3% (partially franked) and, even though profit fell last year, dividends remain well-covered at 1.2 times. Also, with interest rates set to remain low throughout the year, investor demand for shares in Coca-Cola Amatil could pick up to send its shares higher.
Furthermore, a strategic review could help to turn the company's fortunes around in the long run, with a greater focus on international markets having the potential to improve its bottom line performance.
CSL Limited
Although shares in CSL Limited (ASX: CSL) fell by 4% on Friday following disappointing news regarding the flu vaccine being less effective than it normally is, they could still surprise on the upside this year.
Indeed, investor sentiment in CSL is likely to return to being positive because it offers such a strong track record of growth. For example, over the last 10 years, CSL has grown its top line at an annualised rate of 11% which, when compared to other global pharmaceutical stocks, is mightily impressive. Looking ahead, its pipeline of new drugs seems to offer considerable potential, with it being forecast to increase earnings by 24% in the current year.
Of course, CSL's valuation may put off a lot of people. For example, it trades on a price to book (P/B) ratio of 11.8 versus 2.5 for the wider pharmaceutical sector. However, with uncertainty among investors on the up, it could still deliver great returns this year and be a positive surprise for your portfolio.
