The S&P/ASX 200 has fallen 3.2% in the last month, but these five stocks easily outshone that performance, with the best of them jumping 32%. There could be more gains to come, as some of these shares look to be in demand. Embrace The Volatility The index has actually fallen by 3.5% in the last two weeks, from a high of 4316 on 29th Feb 2012, after rising 5% from the start of the year. In the short-term, the differing opinions of the bears and the bulls is what’s making these markets so volatile. Investors should not be scared by…
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The S&P/ASX 200 has fallen 3.2% in the last month, but these five stocks easily outshone that performance, with the best of them jumping 32%. There could be more gains to come, as some of these shares look to be in demand.
Embrace The Volatility
The index has actually fallen by 3.5% in the last two weeks, from a high of 4316 on 29th Feb 2012, after rising 5% from the start of the year. In the short-term, the differing opinions of the bears and the bulls is what’s making these markets so volatile.
Investors should not be scared by volatility. In fact, they should embrace it. Wildly swinging share prices brings opportunities to buy good companies at cheap prices, and to sell some of your second and third rate holdings when share prices spike upwards.
Here are just five of the companies that shook the market in the last month, proving once again, plenty of money can be made even during poor economic times.
Gunning For Goodman
Takeover talks usually fuels a rise in a stock. Singapore based edible oils producer and refiner, Wilmar International Ltd snapped up almost 8% of Goodman Fielder Limited (ASX: GFF) last week, lifting its stake to 10.1%. The share price shot up 33% on February 28th after the announcement. However, no takeover announcement has yet been made, so Goodman shares could slip back, should no offer eventuate.
Goodman Fielder’s past performance has been disappointing, and a takeover offer is about the best thing on the cards for the company’s shareholders.
Seek and you shall find
Seek Limited’s (ASX: SEK) share price has climbed over 20% in the last month on the back of rising revenues, profits, earnings per share and dividends, reported for the six months to December 2011. Revenues were up 31%, and dividends were up 22%. This continues the company’s fairly consistent growth since 2004, with compound annual growth in net profits ringing in at 35%.
The company continues to maintain its number 1 market position with over 70% of the Australian job ad market, with both of its main competitors posting large falls in job ads, while Seek posted a rise of 2%. The company is well positioned for further growth, due to structural trends and market leadership. Although currently trading on a P/E of 19.3, the company is still growing at a faster rate, and could be worth a further look.
Echo to be Crowned?
Echo Entertainment Limited (ASX: EGP) has attracted attention from Crown Limited (ASX: CWN), and its billionaire executive chairman, James Packer, since being split off from Tabcorp Holdings Limited (ASX: TAH) in 2011. Echo owns and operates casinos in Sydney, Brisbane and the Gold Coast, and would be a natural fit for Crown’s existing gaming and entertainment business.
Crown formally disclosed a 9.2% holding in rival Echo on 6th March, and speculation suggests Crown will build up its holding to just under 20%. (20% is the threshold before it must make a formal takeover). The potential for a takeover bid seems highly likely sometime in the future, and this has pushed the share price up 16% in the last month. A takeover bid could see the shares rise higher still, and like a dog with a juicy bone, Packer is unlikely to let go of Echo.
Hail this Cab
Cabcharge Australia Limited’s (ASX: CAB) shares have risen over 15% in the last month on the back of rising revenues and profits. The company reported a 58% rise in net profit to $25.9m for the six months to Dec 2012, compared to the prior corresponding period. A dividend yield of over 6%, fully franked, has also helped.
The Cabcharge payment system is found in approximately 97% of Australian taxis as well as limousines and water taxis. The company also owns and operates its own cabs, with more than 6,000 cabs operating in NSW and Victoria.
Through a joint venture with ComfortDelGro Corporation (based in Singapore and the world’s second-largest transport company), Cabcharge is also the largest private bus operator in Australia, operating over 1,500 buses as at 30th June 2011.
With a virtual monopoly business through its Cabcharge system, a business virtually untouched by global market gyrations, no ASX listed competitors, paying a healthy dividend and with expanding operations and utilisation of new technologies, Cabcharge is definitely a stock worthy of further research.
Reject this Company
Finally, The Reject Shop Limited (ASX: TRS) has risen 13% in the last month. The Reject Shop is showing resilience in the face of weak consumer sentiment. It helps when most of your product is discount variety, imported from China – with a strong Australian dollar.
As I wrote in this article, the company is in an exclusive group by being one of the only Australian retailers that have managed to increase like-for-like sales in the six months to December 2011.
However, there are some worrying signs ahead for The Reject Shop (as outlined in my article), and with the price rising 15% since 15th Feb 2012, it doesn’t look attractive.
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Motley Fool contributor Mike King doesn’t own shares in any of the companies mentioned. The Motley Fool ’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool’s disclosure policy.