You?d be surprised how many Australians leave excess spare cash in the bank earning paltry rates of interest, rather than getting their money working for them.
Making your money work hard for you, while you sit at the restaurant, beach, or cinema is one of the best and most enjoyable ways to growth your wealth over time. It?s not easy though as you have to find high-quality companies capable of growing their profits at strong and consistent rates long into the future.
But that doesn?t mean you need to go and look under rocks at the small-cap end of the market,…
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You’d be surprised how many Australians leave excess spare cash in the bank earning paltry rates of interest, rather than getting their money working for them.
Making your money work hard for you, while you sit at the restaurant, beach, or cinema is one of the best and most enjoyable ways to growth your wealth over time. It’s not easy though as you have to find high-quality companies capable of growing their profits at strong and consistent rates long into the future.
But that doesn’t mean you need to go and look under rocks at the small-cap end of the market, as the best risk-adjusted opportunities almost certainly exist in the mid-cap space where companies have enough defensive scale and plenty of room to grow.
Below I name three such businesses that carry a fair bit of risk, yet over time could deliver ballooning wealth to ambitious investors.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) is a medical device business I covered in more detail yesterday. Its shares have climbed 420% over the past five years, yet it’s no small-cap flash in the pan with a market value around NZ$5.7 billion. This means it has the dominance in its space to benefit from a narrow moat, although the stock is expensive at around 36x annualised forward earnings.
The company is due to report on May 22 and I would wait until it delivers its numbers to let the market value it before building a position.
DuluxGroup Limited (ASX: DLX) is the eponymous paint maker that just reported its half-year results this week, with net profit up 14% to $72 million. Its return of 141% over the past five years also paints a pretty picture for investors and given its dominant market position, alongside a reasonable valuation it may deliver for investors over the next five years.
This company is no tiddler either, with a market value of $2.7 billion and a full year dividend around a fully franked 3.5% to pay you, as the business grows larger.
Catapult Group International Ltd (ASX: CAT) is the wearable sports analytics business that is almost certainly the most high risk / high reward play among the three. The shares have fallen 30% over the past year to change hands for $1.92 today, after the group posted a weaker-than-expected result for the quarter ending March 31, 2017.
This company is a market-leader in the giant global professional sports market and has the opportunity to build a narrow moat thanks to the market-leading strength of its products. If the company starts to grow profits over the long term, the share price is likely to follow it one way (higher) from here.
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 Catapult Group International Ltd.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia has no position in any of the stocks mentioned. 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.