Focusing on stocks in the "sweet spot" of $200 million to $500 million market capitalisation allows an investor to screen for companies which can possess a number of appealing attributes.

Here's just a few of those key attributes that you may find in this market space:

• already proven business model
• profitable or at least near breakeven
• operating in an attractive niche
• a long runway of revenue growth opportunity ahead

With the above criteria in mind, here are three companies that look to have attractive growth profiles.

Somnomed Limited (ASX: SOM) provides diagnostic and treatment solutions for sleep-related breathing disorders including obstructive sleep apnea (OSA) and snoring.

In this regard, SomnoMed is a competitor to the larger ResMed Inc. (CHESS) (ASX: RMD).

There is an important difference however. While ResMed manufactures masks and breathing apparatus which could be described as invasive, SomnoMed has developed a mouthguard-style product which is relatively non-invasive.

A recent trading update by SomnoMed highlights the strong growth rates the company is currently enjoying.

For the first quarter SomnoMed achieved unit sales growth of 16.9% and revenue growth of 13.4% to $10.9 million.

Growth was strong in both North America and Europe with the added positive news that SomnoMed's products will be eligible for reimbursement in France.

Macquarie Telecom Group Ltd. (ASX: MAQ) is one of the few telecommunication companies to have not been caught up in the merger and acquisition activity which has swept through the sector over the past few years.

The group specialises in three core areas:

1. As a full service provider of telco needs to mid-sized businesses
2. Cloud services
3. Cyber security, secure cloud and data centres for the Federal Government

For the 12 months ending June 30, Macquarie Telecom achieved a 5% increase in revenue and a 23% increase in earnings before interest, tax, depreciation and amortisation (EBITDA).

With a suite of strategic data centre assets and contracts, Macquarie appears well placed to benefit from growing demand for telco services.

Lovisa Holdings Ltd (ASX: LOV) is a retailer of 'fast fashion' jewellery.

The company already has 162 stores across Australia and New Zealand with a further 92 stores spread across Singapore, Malaysia, South Africa, UK and the Arabian Gulf.

This growing presence in overseas locations is the basis for investor enthusiasm for the stock, with supporters seeing a large opportunity for further store roll-outs.

Importantly, it's not just the expansion opportunity which is enticing. Same store metrics are also appealing with comparable sales up 5.5% last year.

Lovisa's management has provided guidance for growth in store numbers of between 20 and 30 new stores and a same store sales target of between 3% and 5% in the current financial year.

The post 3 ASX stocks to buy now to get rich later appeared first on The Motley Fool Australia.

More reading

• The Anthropic IPO could be the next big catalyst for ASX AI infrastructure stocks
• How much is needed in superannuation to target a $9,000 monthly passive income?
• Why Macquarie Technology is one of the most interesting AI infrastructure plays on the ASX
• Why did ASX 200 retail shares lead the market last week?
• 2 top ASX shares to buy and hold for the next decade

Australian Foundation Investment Co.Ltd. (ASX: AFI) is the veritable giant when it comes to the listed investment company (LIC) space on the ASX.

With a market capitalisation of $6.6 billion, Australian Foundation (AFIC) dwarfs nearly all other LICs with the exception of Argo Investments Limited (ASX: ARG) which boasts a market capitalisation of $5 billion.

AFIC's long term CEO, Mr Ross Barker, is an investor with plenty of experience and when he shares his view on the market it's worth listening.

In a recent article in the Australian Financial Review Mr Barker stated that it would be difficult for the major banks to maintain their dividends in light of the decision by the board of Australian and New Zealand Banking Group (ASX: ANZ) to cut its recent interim dividend from 86 cents per share (cps) to 80 cps.

Having earnt 132 cps (adjusted pro forma basis) for the half year, the pay-out ratio for ANZ's dividend corresponded to 65%.

What could happen next?

The cut on ANZ's dividend reduced the group's pay-out ratio to a level significantly below that of its peers.

If this is a sign of things to come for the banking sector, then shareholders of the other three major banks could soon face the prospect of lower dividend payments as well.

Taking the most recent interim dividend payment from National Australia Bank Ltd. (ASX: NAB), NAB has a pay-out ratio of 82%. This is the highest of the "Big 4" and arguably it is the bank most likely to be forced to cut (based on an interim dividend of 99 cps each and interim diluted cash earnings per share (EPS) of 120.7 cps).

Westpac Banking Corp (ASX: WBC) has the next highest pay-out ratio at 79.5% (based on an interim dividend of 94 cps and interim cash EPS of 118.2 cps).

Rounding out the group is Commonwealth Bank of Australia (ASX: CBA) which had a pay-out ratio of 77.5%. As the lowest and arguably the most conservative of the group, CBA's dividend sustainability could potentially be the safest (based on the last paid interim and final dividends of 198 cps and 222 cps respectively and a FY 2016 EPS result of 542 cps).

What should you do?

While bank shares have been a key sector for investors chasing fully franked dividend yields, as an investor in the share market it is important to be forward looking and not to focus on the past.

The popularity and pricing of bank shares is highly likely to wane if dividends are reduced, so a focus on downside risk appears necessary.

The post Why this fund manager is worried about the sustainability of bank dividends appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $7,500 monthly passive income?
• How much is needed in superannuation to target a $5,000 monthly passive income?
• Is now the time to turn to high yield dividend shares?
• 1 ASX dividend stock down 25% I'd buy right now

To paraphrase investment guru Warren Buffett, buying shares is like buying socks – load up when they're cheap!

Whilst the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is trading around the 5,400 point level which is close to its 52-week high of 5,611 points, there are a handful of stocks which are currently trading at fresh 52-week lows.

Here are two beaten-up stocks that could be bargains, which you might want to consider.

Magellan Flagship Fund Limited (ASX: MFF) – this listed investment company (LIC) is managed by global fund manager Magellan Financial Group Ltd (ASX: MFG).

Over the past year, while the share price of the management company has rallied around 6%, shares in the LIC have dropped nearly 10% and last week touched a fresh 52-week low of $1.59.

Despite the lacklustre near term performance of Magellan Flagship Fund I remain positive on the potential for this portfolio. Highlighting the ability of the manager to add value, Magellan Flagship Fund's share price is up an impressive 164% over the past five years.

The portfolio is constructed with a focus on high-quality US-listed companies such as Visa, Home Depot and Microsoft. Stocks are only added to the portfolio when they are available at attractive prices.

With the share price trading close to its post-tax net tangible asset backing, the stock could be considered fair value. Given the manager's stock-picking track record there is reason to believe that the portfolio can provide solid returns to shareholders in the future.

Now could be an attractive time to begin building a stake in this LIC.

Reject Shop Ltd (ASX: TRS) – the share price of this discount retailer touched a new 52-week low of $9.10 last week.

The stock has now fallen 20% in the past three months, although over the last year the share price is actually up 4.5%.

Interestingly, the recent weak share price performance comes in the wake of a strong set of full year results.

For the 12 months ending June 30:

• Sales grew 5.7% to $800 million, with comparable store sales up 3%
• Underlying profit soared 47.5% to $21 million, equating to 72.8 cents per share (cps)
• Full year dividends were ratcheted up from 30 cps to 44 cps

With the stock trading on a price-to-earnings (PE) ratio of just under 13 times, the Reject Shop's share price would appear to be undemanding.

Assuming the company can continue to grow sales at a similar rate in the current financial year, then now could be an attractive entry point for this retailer.

Foolish takeaway

Warren Buffett once stated that you pay a high price for a cheery consensus.

Whilst it rarely feels comfortable to buy a stock which is out-of-favour with the market, it is amongst this unloved group that shares with the highest potential to outperform are likely to be found.

The post Here's why I might buy these 2 beaten-up share bargains appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares I'd buy in June
• 2 great ASX dividend shares I plan to buy in June
• How much is needed in superannuation to target a $3,000 monthly passive income?
• Don't want to rely on your wage? Build a second income with these ASX shares
• Why I just invested $2,000 into this ASX share for dividend income

There certainly is money to be made in the packaging business.

One of Australia's wealthiest families, the Pratts, have built a multi-billion dollar fortune out of the humble cardboard box.

For investors, there are a number of ASX-listed options for gaining exposure to the packaging industry, the largest of which is Amcor Limited (ASX: AMC) with a market capitalisation of $17.8 billion.

Following behind is the still significant Amcor spin-off Orora Ltd (ASX: ORA), with a market capitalisation of $3.7 billion.

Rounding out the major listed packaging companies is Pact Group Holdings Ltd (ASX: PGH). It has ties to the Pratt family, with a market capitalisation of $2 billion.

Over the past decade, owners of Amcor's shares have enjoyed total shareholder returns (TSR) – that's share price appreciation plus dividends – of 15.2% per annum (pa).

That's a very impressive return. For comparison, market stalwart Telstra Corporation Ltd (ASX: TLS) has achieved a TSR of 9.9% pa over the past decade.

With an impressive track record of creating double-digit shareholder value, Amcor is a stock which long-term, defensive investors could consider for their portfolio. Here's why…

Solid growth expected

For the 12 months ending 30 June 2016, Amcor reported (on a constant currency basis) a 3.7% increase in revenue, an 11.3% boost in earnings per share (EPS) and a 4.3% increase in dividends.

Whilst management was coy on providing guidance other than "the outlook for the 2016/17 year is for higher earnings than the 2015/16 year, expressed in constant currency terms", analysts appear to be expecting reasonably solid growth.

According to consensus data provided by Reuters, EPS growth of 11% and 10% is being forecast for FY 2017 and FY 2018 respectively.

Global operations

Amcor broadly operates in two business units namely Flexibles and Rigid Plastics.

To highlight the global nature of Amcor's operations and the exposure the group provides to a range of currencies and economies consider this:

• In FY 2016, sales by region for the Flexibles division were 48% Western Europe, 12% North America, 32% emerging markets and 8% Australia and New Zealand
• The Rigid Plastics division meanwhile recorded 66% of sales from North America and 34% of sales from Emerging Markets

With assets across the globe, Amcor offers important diversification for shareholders. This global asset base also offers potential for higher growth via the group's exposure to faster growing overseas economies.

Reliable dividend

Many investors wish to own shares that will provide them with a reliable and preferably growing stream of dividends.

While Amcor's trailing dividend yield of 3.6% might not appear exciting, particularly considering the dividend is unfranked, there are reasons to be positive.

Firstly, the dividend (as reported in US dollars) has grown each year for the past six years. This period includes the demerger of Orora which reduced the earnings of the Amcor group. This is a trend which is hopefully set to continue.

Secondly, the dividend is well covered at 1.4 times EPS. This offers a large degree of comfort that the dividend is maintainable.

The post 3 reasons you should add Amcor Limited shares to your portfolio appeared first on The Motley Fool Australia.

More reading

• Why Telstra and these defensive ASX dividend shares could be top buys
• 2 strong ASX dividend shares with big yields to buy in June
• 3 ASX dividend shares offering yields above 5% that most investors have never heard of
• 3 ASX dividend shares yielding 5.5% or more
• Should I buy Amcor shares for their 'attractive' dividend yield?

What: On Thursday, Rio Tinto Limited (ASX: RIO) shareholders endured a 2.7% slump in the share price as investors aggressively sold off resources stocks.

BHP Billiton Limited (ASX: BHP) shareholders fared even worse with the stock ending down 2.9%.

So What: The sell-off came in the wake of a downgrade by global banking giant Citi Group which issued "sell" recommendations on both Rio and BHP.

Citi's analysts cited a significant pull back in bulk commodity prices as we move into 2017 as a key factor in its recommendation change according to a report in the Australian Financial Review.

Now What: Shareholders in mining companies could be in for another rocky day of trade on Friday.

Rio and BHP shares experienced further falls in overnight trade on the London Stock Exchange, both stocks fell by around 4.5% each.

Despite a small rise in the iron ore price overnight, the selling pressure from London is likely to further weigh on local sentiment today.

Foolish Takeaway:

With Rio and BHP shares rallying by 15% and 27% respectively over calendar year 2016, shareholders have enjoyed significant outperformance compared with the 3% return from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

The share price gains have accompanied a solid rise in commodity prices, particularly iron ore. However doubt remains over the sustainability of this rally.

Given the rally has been driven by Chinese demand which is not only opaque, but also artificially inflated by government stimulus, it would appear wise to remain sceptical of the underlying drivers of this rally.

While analyst consensus forecasts suggest a big leap in earnings per share (EPS) for BHP in the current financial year, the rate of growth in FY 2018 slows dramatically. (source: Reuters)

Meanwhile, earnings expectations for Rio forecast a slide in EPS over the next few years. (source: CommSec)

Taking these consensus expectations into account, it would be understandable, in my opinion, for shareholders to consider taking some profits off the table at this point.

The post Here's why Rio Tinto Limited and BHP Billiton Limited shares got slammed yesterday appeared first on The Motley Fool Australia.

More reading

• Why these ASX blue-chip shares are strong buys right now
• Rio Tinto shares slump 7.5% from an all-time high: Buy, sell or hold?
• Buy, hold, sell: Ampol, Lendlease, BHP shares
• Buy, hold, sell: Coles, BHP, CBA shares
• 3 top ASX mining shares for investors right now

Perhaps the biggest advantage an investor in their forties has over other age groups is that they still have time on their side.

With retirement for most still at least two decades away, this offers a significant opportunity for workers in their salaried prime to buy a portfolio of "long-term compounders."

So what constitutes a long-term compounder?

This is the type of company which investors like Warren Buffett focus on buying. They're companies with good long-term growth prospects and the ability to reinvest their profits at an attractive return, allowing those reinvested profits to compound.

Here are three companies which could be worth considering.

Ramsay Health Care Limited (ASX: RHC)

The health care sector is a prime growth sector for the economy and is set to benefit from a long term tailwind. Add in the defensive characteristic of the sector and there is plenty to like about health care companies.

Retaining and reinvesting profits has helped Ramsay to expand its earnings per share (EPS) from 55 cents per share (cps) 10 years ago to 221 cps for the 12 months ending 30 June 2016. The total shareholder return (TSR) has been a corresponding 25.2% per annum (pa) over the past decade.

With a forward price-to-earnings ratio of 56 times Ramsay isn't short term cheap. However, with plenty of opportunities overseas, if you take a long term view there is potential for Ramsay to grow into its valuation.

REA Group Limited (ASX: REA)

While REA already has a dominant market-leading share of the real estate classifieds advertising market in Australia, its overseas operations have plenty of scope for future growth.

These growth opportunities mean that despite strong cash flow, REA Group only pays out around half of its earnings as dividends.

That capital allocation decision looks well founded considering the 30.8% pa TSR achieved over the past decade which has accompanied a rise in EPS from 12 cps 10 years ago to 168 cps in FY 2016.

TPG Telecom Ltd (ASX: TPM)

The share price of telecommunications provider TPG has been severely sold down in recent months which could have opened up a window of opportunity for long-term investors.

TPG has undertaken an aggressive acquisition strategy in recent years to expand its market share. This has been funded via a mixture of debt and equity which has consequently entailed a low dividend pay-out ratio.

With EPS growing from just 1.6 cps a decade ago to 38.3 cps in FY 2016 and a 10-year TSR of 31.4% pa, compounding the group's retained earnings looks to have been the right move by the board and management.

Foolish takeaway

While the outlook appears bright for each of the three companies mentioned above, it is important to remember that even if a sector has good prospects that doesn't mean individual companies will automatically benefit.

One major risk is competition. For example, REA Group shareholders must remain alert to new entrants which in the future may displace REA's current grip on the property advertising market. (source: CommSec)

The post In your 40s? 3 stocks to consider buying appeared first on The Motley Fool Australia.

More reading

• Why Aeris Resources, Northern Star, REA Group, and Weebit Nano shares are falling today
• Why did this major broker just do a backflip on REA Group shares?
• 5 things to watch on the ASX 200 on Tuesday
• How to become rich by investing in ASX shares
• TPG Telecom just raised its dividend. Here's what that means for income investors

What: The share price of leading integrated energy company Origin Energy Ltd (ASX: ORG) has rallied 18% since the beginning of calendar year 2016.

That's good when compared with the measly 3% return from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

However, when placed into a medium term context, Origin's 60% share price slump over the past five years, compared with the 31.5% gain in the index, makes it clear that Origin has been a significant underperformer for longer term shareholders.

So What: Given the cyclical nature of the oil and gas sector, it's important investors take a longer term investment horizon.

In the case of Origin, two major factors to consider relate to the group's interest in the Australia Pacific LNG (APLNG) facility.

1. Oil price – because Origin's LNG contracts are priced with reference to the oil price the plunge in oil has been a major headache for the group.

Thankfully that headache is diminishing thanks to a rally in the oil price.

Last night, Brent crude rallied to over US$53 a barrel in the wake of comments by Russia that it would cooperate with OPEC to stabilise the oil market.

2. Train 2 enters production – another key factor for Origin is the performance of eastern Australia's largest natural gas project APLNG.

With Train 1 having already been operating effectively for some months, investors have been eagerly awaiting the commissioning of Train 2, which adds further scale and operating efficiencies to APLNG.

Just this week, Origin released the pleasing news that APLNG "had produced the maiden LNG cargo from the second of its 4.5 million tonnes per annum production trains."

Now What: This week's announcement regarding Train 2, coupled with a more positive outlook for the oil price is welcome news for Origin's shareholders.

While a rising oil price is also good news for a number of other LNG producers including Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL) and Oil Search Limited (ASX: OSH), my money is on Origin.

Reviewing analyst consensus data for Origin shows that expectations are for an increase of over 100% in earnings per share over the next two years to 55 cents per share for FY 2018.

Based on this forward estimate, Origin is trading on (in my opinion) an undemanding price-to-earnings multiple of just 10 times.

The post Oil price surges: Are Origin Energy Ltd shares back in the buy zone? appeared first on The Motley Fool Australia.

More reading

• 3 compelling reasons to buy Origin Energy shares today
• Buy, hold, sell: Origin Energy, Megaport, NAB shares
• Guess which ASX 200 share is jumping 17% on earnings guidance upgrade
• Experts name BHP and these ASX 200 shares to buy this week
• Buy, hold, sell: Mineral Resources, IAG, Origin Energy shares

There are lots of ways to generate investment ideas. Talking to and reading the thoughts of other investors is certainly one way to uncover opportunities.

Each month, contributors to The Motley Fool identify their favourite stock pick. If you click on this link you can read their most recent stock ideas.

In my opinion, this list, has a number of actionable ideas. Here are two stocks which I found particularly compelling.

IVE Group Ltd (ASX: IGL) listed on the ASX less than a year ago at $2 a share. With the stock currently trading at $2.15, the initial public offering (IPO) could be described as successful considering both IVE Group and the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) are up around 8% since the float date.

IVE Group is a vertically integrated marketing services and print communications provider that boasts a number of high profile clients including Tabcorp, American Express, QBE Insurance and AMP.

For the 12 months ending June 30, IVE Group reported pro forma revenue growth of 13% to $382 million, earnings before interest and tax (EBIT) growth of 90% to $33 million and net profit after tax but before amortisation (NPATA) growth of 107% to $22.5 million.

Growth was driven by a combination of organic wins, an expanded service offering and acquisitions. Contributing to the organic growth was a number of new client wins including contracts with Westpac, Vodafone Australia and McDonald's Australia.

With a market capitalisation of approximately $190 million and net debt of $37 million, IVE Group is trading on what appear to be undemanding metrics considering both FY 2016 growth rates and management's outlook for further growth in FY 2017.

Flight Centre Travel Group Ltd's (ASX: FLT) share price has fallen around 10% in calendar year 2016 to currently trade near $36.

Despite this near term underperformance compared with both the index and its listed peers such as Corporate Travel Management Ltd (ASX: CTD) and Webjet Limited (ASX: WEB)  (up 3% and 117% respectively) the longer term record of Flight Centre remains outstanding.

The growth outlook for Flight Centre remains positive with the group undertaking a number of small bolt-on acquisitions in 2016.

In recent months, the group has undertaken no less than three acquisitions which should help to drive growth in the years to come.

• The group acquired a 49% shareholding in Gold Coast-based Ignite Travel Group. Ignite focusses on "curated holiday packages, travel vouchers and rewards programs." Ignite's total transaction value (TTV) in FY 2017 is expected to exceed $100 million.
• Flight Centre expanded its corporate travel footprint in continental Europe via the acquisition of corporate businesses in Sweden, Denmark, Norway, Finland and Germany from European online travel agency eDreams. The acquired businesses were expected to turn over around EU110 million in FY 2017.
• Flight Centre already generates TTV of $419 million from its Indian operations. In October, the group announced the acquisition of an India-based Travel Tours Group, which operates from 18 locations and generates $150 million in TTV.

With a ten-year track record of achieving a total shareholder return of 12% per annum, the recent share price weakness could be viewed as offering an attractive entry point for long-term investors.

The post 2 share ideas to buy in October appeared first on The Motley Fool Australia.

More reading

• These 3 oversold ASX 200 shares look cheap right now
• Here are the 10 most shorted ASX shares
• How much could investors profit off these undervalued ASX 200 shares with a $10,000 investment?
• 4 ASX 200 shares rated a strong buy and with upsides of up to 51%
• Here are the 10 most shorted ASX shares

Last week, the share price of Wesfarmers Ltd (ASX: WES) touched a fresh 52-week high of $45.38.

Shareholders have now experienced a 12.4% rise for the year which is certainly not a bad absolute return.

Equally, on a comparative basis a 12.4% rise is impressive considering the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has gained just 3.5%.

Some investors may have been taken by surprise that Wesfarmers has rallied to a new high in light of the weak performance of some other top 20 stocks. Fellow blue chip Woolworths Limited (ASX: WOW) for example remains well off its 52-week high.

Having produced solid near term outperformance, should investors expect further near term gains ahead for Wesfarmers?

What have we learnt over the past three months?

If we observe Wesfarmers' share price over just the past three months, we'll see that the price has risen 12.2% in that time.

These gains could be explained by investors revising their outlook and valuation for the company in light of business conditions and Wesfarmers' recently released full year results.

Positive business conditions for Bunnings: Bunnings is a key profit generator for Wesfarmers and the recent demise of competitor Masters has not only removed a major competitor from the market, but has also allowed the group to pick up a handful of appealingly located store sites.

According to a media release in late August, if all agreements complete, Bunnings will ultimately obtain 15 previously controlled Masters sites. Eleven of these 15 locations will represent replacement stores with the remaining four sites representing new store locations.

Positive profit outlook: Recently, shareholders received a reduced final dividend of 95 cents per share (cps), down 14.4% from 111 cps. However, revenues grew 5.7% to nearly $66 billion and earnings per share (EPS) only slipped 3.1% to $2.09 per share. Return on equity was almost flat at 9.6%.

Although management didn't provide any figures in its outlook statement, overall management did appear upbeat on the outlook for its retail facing businesses, while noting that the outlook remained challenging in the near term for its industrial facing businesses.

While management chose not to provide much colour on the group's outlook, analysts have of course made their own estimates.

According to consensus forecasts provided by Reuters, EPS is set to increase over the next two full year reporting periods to reach $2.57 in FY 2018.

Foolish takeaway

Based on the consensus estimate above, the stock is trading on a forward price-to-earnings ratio of approximately 18 times.

That looks a fairly full price in my opinion and could suggest little near term upside in the share price, unless earnings estimates are increased.

The next test for Wesfarmers' share price is likely to be October 26, when the company announces its first quarter sales result.

The post Wesfarmers Ltd shares hit new 52-week high: Is it too late to buy? appeared first on The Motley Fool Australia.

More reading

• 3 ASX stocks I'd buy during a sharemarket crash
• Are Wesfarmers, Xero and this ASX 200 share buys in June?
• Why 30 June is the most important date for your superannuation this year
• How to become rich by investing in ASX shares
• 3 ASX defensive stocks to buy while sharemarkets are volatile

Credit Corp Ltd (ASX: CCP) is a leading provider of repayment solutions.

Its operations involve the purchase of past due debt ledgers from companies such as credit card and utility companies and then an attempt to recover amounts in excess of the purchase price from those ledgers.

In the past six months, the share price of Credit Corp has soared 85.5%.

The group's longer term record is also impressive. Over the past 12 months, the share price is up over 93%, over five years the share price is up 370% and over the past decade the share price is up 129%.

In comparison, its nearest listed competitor Collection House Limited (ASX: CLH) has recorded a share price decline of 46% over the past year, a gain of 63% over the past five years and a flat return over the past decade.

The solid near term and longer term performance of Credit Corp hasn't gone unnoticed by some top fund managers.

Recently, Wilson Asset Management Group – which runs listed investment company (LIC) WAM Capital Limited (ASX: WAM) – upped its stake in Credit Corp to 6.3% after going substantial with 5.2% in June 2016.

New Zealand-based Pie Funds is another fund manager that is backing the company.

In its October monthly newsletter, Pie Funds had the following to say regarding Credit Corp's FY 2016 results:

"CCP delivered a fantastic result with reported net profit after tax of A$45.9 million (up 20% on the previous corresponding period), above the high-end of its pre-result guidance of A$44 million to A$45 million. CCP has delivered seven-year CAGR EPS growth of 22 percent and compounded book value and dividends at more than 26 per cent pa for the last 15 years."

Outlook

Management has provided guidance for FY 2017 of profit growth between 13% and 18%. This strong growth is being driven by elevated purchasing in FY 2016 and a strong purchasing pipeline for FY 2017 which is expected to boost increased collections and earnings from Credit Corp's debt buying business.

Management's guidance corresponds to earnings per share of between 109.7 cents per share (cps) and 114 cps for FY 2017.

Despite the rally in the shares price to $18.50, at the low end of guidance, the stock is trading on a forecast price-to-earnings ratio of just under 17 times. Arguably the stock is inexpensive considering the track record and growth rates being achieved. Investors should consider however whether an appropriate discount should be applied on account of the inherent risks in Credit Corp's business model.

The post Here's why top fund managers have been buying Credit Corp Ltd shares appeared first on The Motley Fool Australia.

More reading

• Why did this broker just lower its price targets on these ASX shares?

Many blue chip shares such as Woolworths Limited (ASX: WOW) and Telstra Corporation Ltd (ASX: TLS) have been disappointments for their shareholders over the past 12 months, providing negative returns.

In contrast, some smaller, lesser followed companies have achieved sensational returns.

Here are three small-cap superstars that have provided their shareholders with huge returns in the past year.

Bapcor Ltd (ASX: BAP), previously known as Burson Group, is a leading distributor of automotive parts to both retail and wholesale trade customers.

Since listing in 2014 the share price is up around 200%, while in the past year alone the stock has surged close to 70%.

Driving the share price higher has been a mix of strong operating results and acquisitions.

On the results front, same-store sales grew around 5% in FY 2016, the gross margin expanded by 1.4% and the dividend was increased 26.4% to 11 cents per share (cps).

Meanwhile, a number of bolt-on acquisitions have also been undertaken including the recently announced NZ$322 million takeover offer for New Zealand based automotive distribution and wholesaling company.

Bapcor's future remains bright.

Bellamy's Australia Ltd (ASX: BAL), is the owner of the top-selling baby formula brand Bellamy's Organic Australia.

The group's share price has soared an astounding 780% since first trading on the ASX in August 2014; in the past year, the stock is up around 60%.

The market's love affair with this company has been in part driven by impressive financial results.

In FY 2016, revenue soared 95% to $245 million, earnings leapt 342% to $54 million and the full year dividend was boosted 316% to 11.9 cps fully franked.

Driving enthusiasm for the stock has been the group's exposure to growing Chinese consumption; Bellamy's reported that China revenues climbed 331%.

This tailwind is likely to continue into future periods.

Hub24 Ltd (ASX: HUB) is a financial services technology company, providing investment and superannuation portfolio administration services.

Hub24's share price has expanded by over 110% in the last year thanks to a big jump in operating metrics.

FY 2016 saw retail net inflows increase 102% to $1.6 billion, retail funds under advice grow 94% to $3.3 billion and platform revenue increase 91% to $15.4 million.

Importantly, having achieved scale, the group is now profitable on a monthly basis which bodes very well for the bottom line in FY 2017.

The post Fire up your portfolio with these 3 small cap superstars appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares highly recommended to buy: Experts
• Why Australia's $4 trillion superannuation pool is creating a once-in-a-generation opportunity for these ASX stocks
• Why I think this could be one of the best ASX 200 growth shares to buy
• 3 ASX shares that could build serious wealth for shareholders
• Buy, hold, sell: Argo Investments, Amcor, Bapcor shares

What: After the close of Monday's trading session on the ASX, UK-based global fund manager Henderson Group plc (ASX: HGG) announced that it had reached an agreement with the US-based Janus Capital Group Inc to merge.

The merger will take the form of an all-stock merger of equals. Assuming the proposal passes all necessary hurdles, on completion Janus shareholders will hold approximately 57% of the combined entity, Henderson's shareholders will hold 43%.

Janus is a well-known asset manager with around US$195 billion in assets under management (AUM). The group has received an elevated profile in the recent past since Mr Bill "The Bond King" Gross joined the company.

So What: The merger is being touted as an opportunity to combine Janus' strength in the US markets with Henderson Group's strength in the UK and European markets.

The merger has been described as an opportunity "to create a truly global asset manager with a diverse geographic footprint which closely matches the global fund management industry."

According to management, this global footprint will allow for improved distribution of investment products and a stronger business with operations in 29 locations around the globe.

On completion, combined total assets under management will be over US$320 billion with revenue of over US$2.2 billion and earnings before interest, tax, depreciation and amortisation of over US$700 million.

The merger is also expected to achieve significant cost synergies with over US$110 million in annualised costs expected to be removed.

Now What: Henderson Group has had an interesting past with the group originally being acquired and then spun out of AMP Limited (ASX: AMP). The group also undertook a dual listing whereby it was not only listed on the ASX but also on the London Stock Exchange (LSE).

Interestingly, its LSE listing looks set to end with the merger announcement stating that the new Janus-Henderson entity would apply for admission to the NYSE (where Janus is currently listed) while retaining its ASX listing.

In trading overnight on the LSE, Henderson Group's shares surged nearly 17% in response to the announcement.

That reaction sets a positive stance for trading in the group's shares when the ASX opens on Tuesday morning. In early trading, the share price was up 12.8% to $4.49.

The post Fund manager Henderson Group plc in US$6 billion merger – Shares set to soar appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Don't want to buy SpaceX shares? You may not have a choice
• 3 ASX small-cap shares to buy: Morgans
• Up 90% in a month, why did Megaport shares just get downgraded?
• Three ASX shares to buy right now according to Morgans

Despite shares in Macquarie Group Ltd (ASX: MQG) falling by close to 1% in calendar year 2016 -underperforming the 3.4% return from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) – there are still reasons to remains bullish on the outlook for the global investment bank.

Here are 5 reasons why Macquarie could be a good long-term bet.

1. Track record – Macquarie has been in business since 1969 and over the decades the group has become a global provider of banking, financial, advisory, investment and funds management services with operations in over 28 countries.

Over this period the company has achieved the rare record of being profitable every year!

2. Long-term performance –  Macquarie has achieved a 10-year compound average growth rate (CAGR) of 7.1%.

According to data supplied by Macquarie, the group has also achieved long-term earnings growth with a lower level of volatility than a peer group of both fund management businesses and investment banks.

Other key metrics such as return on equity (ROE) are also solid. Macquarie has produced an average ROE of 12.3% over the past decade. (source: CommSec)

3. Annuity earnings – Unlike some investment banks, Macquarie's earnings are relatively predictable with 74% of income coming from annuity-style businesses.

These annuity-style businesses include:

Macquarie Asset Management (MAM) which is the number one infrastructure investor globally and the number three alternative asset manager for pension funds globally. MAM has $487 billion of assets under management which attract annuity-style earnings for the group.

Corporate & Asset Finance (CAF) has $39.7 billion of loans and assets under finance and is one of the largest providers of motor vehicle finance in Australia.

Banking & Financial Services (BFS) has $39.5 billion in deposits from 1.1 million Australians. The division also boasts an Australian mortgage portfolio of $27.8 billion and assets under management on the Macquarie platform of $59.8 billion.

4. Solid dividend – While some investors are fretting about the sustainability of dividends from the major ASX-listed banks, Macquarie is arguably shielded from the regulatory and property related headwinds faced by these "traditional" banks.

Macquarie's dividend would appear sustainable given, not only the earnings outlook for FY 2017 but also the reasonably conservative payout ratio in FY 2016 of 62%.

5. Pricing – While the guidance provided by management at a recent presentation for "FY17 to be broadly in line with FY16" might not get investors excited, analyst consensus estimates are still factoring in earnings per share (EPS) growth of around 3% for the year.

Looking out to FY 2018 (note that Macquarie operates on a March 31 financial year) and EPS growth of 5% is forecast. (source: Reuters).

While growth is low, arguably so it the share price. The stock is trading on an FY 2018 price-to-earnings multiple of just 9.9 times.

The post The bull case for Macquarie Group Ltd appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here's why the ASX 200 is falling despite a sea of green
• 5 things to watch on the ASX 200 on Tuesday
• How to invest in ASX shares when you don't know what to buy
• ASX 200 tech stocks led the market with big share price gains last week

One of the potential problems with following the buy decisions of a fund manager you admire is that you generally have very little colour around the decision.

For example, a fund manager may mention in a monthly report that they acquired shares in a particular company however that same fund manager may never mention when their view changes and sell the shares.

Likewise, a fund manager highlighting a buy decision rarely includes other vital information such as the entry price or the level of conviction they have in the stock.

These "unknowns" make the knowledge of a share purchase arguably of limited value.

For this reason, in my opinion, its best to utilise this knowledge as simply an idea generating mechanism.

With the above in mind, here are five new investments which highly regarded listed investment company (LIC) Argo Investments Limited (ASX: ARG) made during financial year (FY) 2016 that could be worthy of further research.

CBL CORP FPO NZX (ASX: CBL) is a New Zealand-based niche insurer of credit and financial risk. The company has been listed on the ASX for approximately one year and in that time the stock has rallied around 109%.

With the group reporting a large increase in profits for the six months ending June 30, the stock's momentum appears positive.

Estia Health Ltd (ASX: EHE) is a residential aged care provider. The stock has taken shareholders on a wild ride recently with concerns mounting over the regulatory funding environment.

While market concerns would appear justified, with the stock down around 54% since the beginning of 2016, the bad news could potentially be more than fully reflected in the current share price.

Genworth Mortgage Insurance Australia (ASX: GMA) provides lenders mortgage insurance.

While Argo is presumably comfortable with the group's exposure to the rallying housing market, some investors would be concerned that it's the wrong point in the cycle to own Genworth.

The dangers of investing near the top of a cycle would appear to be on show at the recently listed real estate agency Mcgrath Ltd (ASXL MEA).

Since undertaking an initial public offering (IPO) in December 2015, the stock has fallen around 37%. If the property market has a soft landing (or doesn't fall at all) then it's possible the market has become overly pessimistic on Mcgrath. Under that scenario, the current share price of $1.15 could make the stock worth further investigation.

Reliance Worldwide Corporation Aus P Ltd (ASX: RWC) was a popular float and to date, it has proven a profitable investment for IPO investors.

Reliance is a leading provider of plumbing products and has exciting growth prospects in the USA. This US growth potential is used by some to justify the pricing of the stock which is trading on a consensus forecast FY 2018 price-to-earnings ratio of 22.5 times. (source: Reuters)

The post 5 shares ideas from a top fund manager appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Buy, hold, sell: Argo Investments, Amcor, Bapcor shares
• Experts recommend CBA and these ASX shares as buys
• How much is needed in superannuation to target a $7,500 monthly passive income?
• The ageing Australia megatrend: 3 ASX shares built to benefit

REA Group Limited (ASX: REA) owns and operates numerous property classifieds websites including the very popular realestate.com.au.

With a market capitalisation of $7.5 billion, REA Group is already one of the largest technology companies listed on the ASX. Thanks to its numerous overseas operations, however, there is scope for REA Group to grow much larger yet.

Here are three reasons to be positive on the stock.

1. Outstanding FY 2016 results

• REA grew revenue by 20% to $630 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) expanded by 22% to $347 million
• Net profit after tax (NPAT) increased 16% to $215 million
• Earnings per share (EPS) were up 16% to 214.5 cents per share (cps)
• Total dividends per share increased 16% to 81.5 cps

2. Clear domestic market Leader

When it comes to its home market of Australia, REA is miles ahead of its nearest competitor, Domain – owned by Fairfax Media Limited (ASX: FXJ).

The group boasts 889 million page views per month; its nearest competitor has 176 million! Likewise, realestate.com.au attracts approximately 44 million visits per month; its nearest competitor attracts 20.5 million visits!

3. Expanding global footprint

REA has operated in a number of European countries for some years and these businesses are well established.

More recently, exposure to Asia has increased via its takeover of iProperty Group Ltd (ASX: IPP). iProperty has growing operations in Malaysia, Hong Kong, Macau, Singapore, Indonesia and Thailand.

REA also has exposure to the US property market via its investment in US-based digital real estate business MOVE Inc. MOVE achieved revenues growth of 27% to around $360 million and growth in unique users of 17% to 53 million.

Foolish Takeaway

Analyst consensus estimates show that REA Group is expected to earn 196 cps in the current financial year. (source: Reuters) This implies growth of approximately 17%.

With the share price up 25% in the past year to around $57, REA's stock is trading on a forward price-to-earnings multiple of 29 times.

Considering the growth expectations and the quality of the group's business model – which benefits from similar network effects to Carsales.Com Ltd (ASX: CAR) and SEEK Limited (ASX: SEK) – this is arguably a fair price to pay. Conservative investors may prefer to wait for a lower entry point.

The post 3 big reasons to hold REA Group Limited shares appeared first on The Motley Fool Australia.

More reading

• Why Aeris Resources, Northern Star, REA Group, and Weebit Nano shares are falling today
• Why did this major broker just do a backflip on REA Group shares?
• 5 things to watch on the ASX 200 on Tuesday
• How to become rich by investing in ASX shares
• Can you turn $20,000 into $100,000 with ASX shares?

What: At 6:19pm on Monday evening, mining and earthmoving service supplier Bradken Limited (ASX: BKN) announced to the ASX that the board had unanimously recommended a cash takeover offer.

Here's what you need to know: The offer has come from the Tokyo Stock Exchange-listed Hitachi Construction Machinery Co (HCM).

The offer price for 100% of Bradken is $3.25 per share. This represents a 34% premium to the last traded price of $2.43 and a whopping 90% premium to the volume-weighted average price of the past 90 days!

As a global manufacturer and supplier of consumables and capital products to the mining, transport, industrial and contract manufacturing markets, Bradken has not surprisingly been hard hit by the resource sector downturn.

Highlighting the tough operating environment, Bradken's reported profits have fallen from $100 million in FY 2012 to losses of $241 million and $196 million in FY 2015 and FY 2016 respectively.

Dividends have also been suspended since FY 2014 and gearing has risen.

In turn, the share price has fallen significantly. Having reached a high of nearly $15 in late 2007, the stock headed south to a low of just 37 cents earlier this year before rebounding strongly over the past few months prior to this week's takeover offer.

Now What: The rally in Bradken's share price and subsequent takeover offer will be a wakeup call to many value investors who haven't been actively scouring the resource and mining service sectors for opportunities.

While it is probably too late to profit from Bradken, no doubt there are still opportunities out there amongst two of the ASX's most battered and bruised sectors.

Although not without their risks, three companies which could be worthy of value investors' attention are Bradken's peers, Cardno Limited (ASX: CDD), Monadelphous Group Limited (ASX: MND) and UGL Limited (ASX: UGL) whose share prices all continue to trade at depressed levels.

The post Bradken Limited receives takeover offer: Here's what you need to know appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Don't want to buy SpaceX shares? You may not have a choice
• 3 ASX small-cap shares to buy: Morgans
• Up 90% in a month, why did Megaport shares just get downgraded?
• Three ASX shares to buy right now according to Morgans

Most investors will be familiar with the $5.4 billion online employment classifieds operator SEEK Limited (ASX: SEK). In fact, given its dominant domestic market position, it's hard not to know it!

There are, however, a number of other reasons to admire SEEK apart from its local operations.

Here are four other reasons why SEEK is a top stock.

1. Global leader

As I noted above, most investor will be familiar with the strong position SEEK has built within the Australian marketplace. What investors may not be aware of is that SEEK also operates market-leading online employment classifieds businesses in 14 other countries.

These operations provide shareholders with exposure to 11 out of the 30 largest countries by forecast GDP.

What's more, this global exposure is an opportunity significantly larger and under-penetrated compared with its Australian and New Zealand businesses.

2. Proven ability to undertake successful M&A

Mergers and acquisitions (M&A) have been a feature of SEEK's global expansion.

Importantly, the M&A appears to be adding significant shareholder value. According to management, the group has achieved a 400% return on investment from its M&A activities.

Recent deals have included the $104 million acquisition of Brasil Online and topping up its holding in SEEK Asia by 5.5% for $78 million.

SEEK has also been successful in creating shareholder value through capital management initiatives such as the demerger of its international student placement business Idp Education Ltd (ASX: IEL).

3. Past outperformance a guide for the future

While history may not repeat, in SEEK's case it may rhyme!

SEEK appears to have a solid pipeline for growth as it rolls out its successful Australian business model into much larger and less developed markets.

This scenario provides scope for above average growth and returns to continue for the foreseeable future.

4. New Ventures

Not content to just offer employment classifieds advertising, SEEK has looked to offer services across the employment spectrum.

Initiatives include education services such as SEEK Learning which reported revenues of $42 million in FY 2016 and Online Education Services which grew revenue by 28% to $101 million.

With these ventures still relatively new, there is potential for them to grow significantly.

The post 4 reasons why SEEK Limited is a top stock appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares poised for 52% to 78% gains
• Here are the top 10 ASX 200 shares today
• Job ads rose for the first time in three months. Here is why that is good news for these ASX shares
• Why Australia's skills shortage could be a long-term tailwind for this ASX stock
• Are these oversold ASX shares too cheap to ignore?

Ever wondered how to become a millionaire?

Well, stop wondering and start acting would be my advice!

Consider this…

Starting with just $10,000 invested in shares and armed with a rigorous savings plan, over a 30-year time frame you have a very good chance of becoming a millionaire.

Let's assume through a diligent savings regime you are able to save $100 a week. This equates to $5,200 in additional shares that you can acquire for your portfolio each year.

Let's also assume you can achieve a compound return on your investments of 10% per annum. That may sound like a lot – and compared with interest earned on a bank deposit it is – but for many investors it remains an achievable rate of rate of return.

The magic of compound interest is another key ingredient to our plan. This "magic" has the greatest effect the longer it can run – so let's give ourselves 30 years.

The strategy, as outlined above, means in total we save $166,000 over 30 years to invest into our share portfolio. Through the beauty of compounding via the reinvestment of dividends and the reinvestment of any realised capital gains, our wealth will expand by a further $863,863!

Ultimately, after just 30 years, implementing the above strategy would grow your share portfolio to $1,029,863!

Picking stocks that will give you a long-term 10% per annum (pa) return isn't easy of course. One only needs to review the 10-year track record of most ASX listed investment companies (LIC) to see just what a hurdle it is.

For example, here are the total shareholder returns (TSR) achieved by two of the best performing LICs over the past decade.

• WAM Capital Limited (ASX: WAM) – TSR of 9.6% pa
• Australian Leaders Fund Limited (ASX: ALF) – TSR of 12.3% pa

 So, with careful selection you could identify a fund manager who can get you a result close to 10% pa. Alternatively, clever stock picking could get you there.

For example, the following two widely-owned companies have managed to produce double-digit TSR over the past 10 years.

•  Telstra Corporation Ltd (ASX: TLS) – TSR of 10.8% pa
•  Amcor Limited (ASX: AMC) – TSR of 14.4% pa

The post Revealed: How to go from $10,000 to Millionaire status appeared first on The Motley Fool Australia.

More reading

• 5 tips to navigate ASX share market volatility
• 6 ASX 200 shares downgraded by analysts this week
• Why Telstra and these defensive ASX dividend shares could be top buys
• 3 ASX defensive stocks to buy while sharemarkets are volatile
• Which defensive shares are outperforming the ASX 200

Investors may be surprised to learn that in calendar year 2016, CSL Limited (ASX: CSL) has underperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

CSL's share price has gained just 1.6% compared with a rise of 2.4% by the index.

Of course, over the longer term the returns from CSL have been exceptional. Over the past one and five years the stock has gained around 20% and 260% respectively.

Having reported underlying revenue and profit growth (on a constant currency basis) of 8% and 5% respectively for FY 2016, what expectations should investors have for the future?

R&D investment

CSL's management understands the importance of reinvesting revenues back into research and development (R&D). Thankfully, to date, R&D spend appears to have added value for shareholders.

In FY 2016, the R&D investment was US$614 million which equated to around 10% of revenues.

A continuing large R&D spend positions CSL to continue developing breakthrough treatments and growth in the future.

Market leader with competitive advantages

CSL operates businesses which are not easy to replicate thanks to its bank of expensive intellectual property which has been developed over decades.

Through both organic and acquisitive growth, CSL has achieved scale in areas including influenza vaccine and plasma therapies. These market leading positions are hard to topple.

Investors can reasonably expect CSL's competitive advantage to be enduring.

Balance Sheet Strength

CSL's business generates plenty of cash and allows the group to operate with a strong balance sheet.

Apart from the defensive benefit of harbouring a rock solid balance sheet, CSL's cash flows have supported successive share buy backs which have enhanced earnings per share.

Buybacks are likely to feature in the group's future capital management plans.

Outlook

CEO Mr Perreault has stated that:

• "CSL is a growing, broad-based, stable business which generates solid earnings growth"
• "CSL Group's NPAT is expected to grow approximately 11%, at constant currency, on the FY16 result after adjusting for the one-off gains and costs associated with the acquisition of the Novartis influenza vaccines business. On the same basis, EBITDA is expected to grow approximately 14% this financial year. EPS are again expected to exceed profit growth."

Fair Price

Based on one analyst consensus, CSL is trading on a forward price-to-earnings multiple of approximately 29 times. (source: Reuters)

That's certainly not "cheap" by conventional standards, but considering the defensive strength and long term growth potential of the company it's arguably a fair price to pay for investors.

The post Is CSL Limited a buy at this share price? appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• Has the CSL share price finally bottomed out?
• 3 cheap ASX shares I'd buy before sentiment turns
• Why Chalice Mining, CSL, Megaport, and Pro Medicus shares are racing higher
• 6 ASX 200 shares downgraded by analysts this week

The share price of internet provider TPG Telecom Ltd (ASX:TPM) took a hammering last week in response to a weaker-than-expected outlook statement from management.

With the stock continuing to trend lower, shareholders are now nursing a loss of 29% over the past month.

That's an unpleasant experience for shareholders, on the positive side however, the lower share price is arguably offering compelling value.

With TPG having already been on my watch list and a company that I consider to have better than average growth prospects, now looks like a timely opportunity to take a closer look at the company.

Here's a recap on how TPG performed on an underlying basis (but including the contribution from its acquisition of iiNet) for the financial year (FY) ending 31 July 2016:

• Revenues surged 88% to $2.4 billion
• Earnings before interest, tax, depreciation and amortisation (EBITDA) leapt 60% to $775 million
• Net profit after tax expanded 46% to $100 million
• Earnings per share increased 39% to 43.1 cents per share (cps)
• Total dividends of 14.5 cps fully franked were paid for the year, representing an increase of 26%

Growth drivers

Given the size of the iiNet acquisition, it's important to note that the primary driver of growth was the contribution from iiNet.

Stripping out iiNet's contribution, revenue and EBITDA growth was just 2% and 11% respectively.

Pleasingly, TPG's subscriber numbers (excluding iiNet) showed solid growth year on year, rising from 821,000 to 885,000. For comparison the much larger Telstra Corporation Ltd (ASX: TLS) added 235,000 retail fixed broadband customers in FY 2016.

Why has the share price fallen?

The impressive headline numbers failed to win over the market. Instead, investors focussed on the muted underlying growth rates of TPG's business excluding the iiNet contribution.

What's more, EBITDA guidance for FY 2017 was lower than analysts were forecasting and capital expenditure (capex) forecasts were significantly higher.

The combination of higher capex spending which suggests competition is intensifying, coupled with apparent margin compression from the move to NBN wholesale pricing left investors nervous and uncertain.

Foolish takeaway

The market, in my opinion, has rightly reigned in its expectations for the rate of TPG's future earnings growth.

The tailwind of rising data usage and murmurs that NBN Co will adjust its pricing to a more favourable setting, does however (in my opinion) suggest that the long term outlook for TPG is far from dire.

The latest analyst consensus estimates for FY 2018 earnings per share imply a healthy growth rate of around 22% on FY 2016 to 50 cents per share.

With the shares trading near $8.70, the stock is on an estimated forward price-to-earnings ratio of 17 times which looks relatively undemanding to me (source: Reuters).

The post Why I'm excited by TPG Telecom Ltd's 29% share price fall appeared first on The Motley Fool Australia.

More reading

• TPG Telecom just raised its dividend. Here's what that means for income investors
• Why Evolution Mining, JB Hi-Fi, Scentre Group, and TPG Telecom shares are falling today
• TPG Telecom posts mobile growth and strong free cash flow in 2026 update
• Why are Tuas shares crashing 69% on Monday?
• Why these 2 ASX 200 heavyweights just got a big buy call