At the start of the year I wrote an article titled 10 top shares to buy in 2017 and prefaced it with the proposition that when it comes to making money in the share market it pays to focus more on what won?t change, rather than what might change.
That?s because it?s much easier to focus on what won?t change and doing so should lead you to the best investment opportunities as the strongest companies tend to stay that way.
You should also remember that while even the best companies? outlooks, competitive environments, and growth trajectories can change, the basics of…
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At the start of the year I wrote an article titled 10 top shares to buy in 2017 and prefaced it with the proposition that when it comes to making money in the share market it pays to focus more on what won’t change, rather than what might change.
That’s because it’s much easier to focus on what won’t change and doing so should lead you to the best investment opportunities as the strongest companies tend to stay that way.
You should also remember that while even the best companies’ outlooks, competitive environments, and growth trajectories can change, the basics of investing never do.
To make money you have to find high-quality companies on attractive valuations.
High quality companies normally always boast the same characteristics of strong (preferably founder-led) management teams, competitive advantages, relatively low debt levels, and long track records of profit growth.
That’s not going to change in 2017, financial year 2018, or 2020 and beyond.
Below I name 10 companies to consider buying in financial year 2018 as they are likely to be among the best for a long time yet.
Corporate Travel Management Ltd (ASX: CTD) is a founder led corporate travel services provider that may look expensive based on trailing multiples of annual earnings. However, it is growing strongly thanks to a mix of organic and acquisitive growth. The organic growth largely the results of a sales driven business model that aligns staff’s remuneration with the success of the business.
ResMed Inc. (CHESS) (ASX: RMD) is a healthcare business based in San Diego that is a market leader in selling its sleep treatment medical devices and cloud-connected software for patient management. The company has a founder led management team and genuine focus on the long term opportunity of treating patients with sleep disorders. The stock is not cheap at $9.29, but the company is high quality with a long track record of profit growth.
REA Group Limited (ASX: REA) has climbed 340% over just the past five years thanks to its operating leverage, competitive advantages, quality management and consistent profit growth. The company is highly valued at $63.26, but if it retains its postion as Australia’s number one property website it may deliver market-crushing returns in the five years ahead.
Commonwealth Bank of Australia (ASX: CBA) is Australia’s most profitable bank with an enviable long-term track record of profit and dividend growth. This comes about thanks to its dominant market position that is unlikely to ever be threatened. Over the long term this business is likely to deliver investors strong total returns.
Magellan Financial Group Ltd (ASX: MFG) is an international equities manager that is founder led. This means it’s able to retain a tight control over recruitment and costs, with human resources and operating control being critical to the success of a funds management business. The stock sells for $25.90 but could continue to outperform thanks to the group’s start-up nature.
Reliance Worldwide Corporation Aus (ASX: RWC) is a founder-led plumbing and bathroom parts supply business with global growth horizons. Counting against this business is that it does not have much of a track record as a public company, although it looks to tick the boxes as an investment prospect.
Domino’s Pizza Enterprises Ltd. (ASX: DMP) has climbed 550% over the past five years thanks to its franchise business model’s success in Australia and overseas. Notably, the stock has now come back to a more reasonable valuation at $60.90, which means it could be an opportunity given the opportunity it has to expand margins at its overseas businesses.
Wesfarmers Limited (ASX: WES) as the operator of Coles supermarkets earns a place on the list by virtue of its scale and market position. It also operates the dominant Bunning Warehouse business in Australia and has an enviable track record of profit and dividend growth to impress the long-term investor.
Scentre Group Ltd (ASX: SCG) as the operator of the Westfield shopping centres across Australia is the owner of some of the best commercial property locations in the land. This provides it defensive earnings streams and strong cash flows to support high and steadily increasing dividend payouts. This is a high-quality business and although the $4.28 share price is on the expensive side, if it got 5% cheaper I would be a buyer.
ASX Ltd (ASX: ASX) is the operator of the local stock exchange and looks set to remain the dominant market player for the indefinite future. New technology will bring competitive threats to the business, but also opportunities and ASX continues to pay attractive dividends supported by its reliable cash flows. At $52.56 the stock is a touch expensive for my liking, but it remains a quality business.
For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.
The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Tom Richardson owns shares of Corporate Travel Management Limited, Magellan Financial Group, REA Group Limited, and ResMed Inc.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of ASX Limited and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.