Now is the time for long-term investing

A report in The Australian yesterday posed the question whether or not it is too late to ‘climb aboard the share market bus’. After all, despite the dip between May and June, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has still soared 20% in the last 12 months – not to mention the United States’ Dow Jones, which is sitting at never-before-seen heights.

Whilst shares are no longer as cheap as they have been in recent months, there are still attractive fundamentals in both the Australian and US stock markets, whereby ‘traditional signals’ impending the end of an upswing have not yet become evident.

It should be noted, however, that shares around the globe have largely been driven up over the last 12 months as investors have sought out defensive high-yielding stocks, such as Commonwealth Bank (ASX: CBA) or Telstra (ASX: TLS), in order to avoid the low interest rates on offer in term deposits. At its current level, it is likely that the market will rely upon strong earnings reports and growth in profits to be driven higher.

Whilst it has been predominantly the large-cap stocks that have caused the benchmark index to skyrocket, companies on the lower half of the board have largely been neglected, which is good news for investors with a long-term focus.

For instance, promising telecommunications company, Amcom Telecommunication (ASX: AMM) delivered strong results yesterday that saw its share price climb 9%. Meanwhile, ResMed (ASX: RMD) – developer and manufacturer of products for the treatment of respiratory problems – delivered profit growth of 14% for the full year ending 30 June.

Despite their recent gains, these companies still offer enormous growth potential and are attractive prospects for you to add to your portfolio.

Foolish takeaway

After the stock market’s run over the last 12 months, many investors are remaining on the sidelines – either waiting for prices to drop further or waiting to make sure prices continue to climb to gain assurance that the market will not crash (by waiting for this, you are increasing the chance of buying at the peak value and selling out of fear as prices drop).

It is important to realise that there are still bargains to be had, and plenty of companies that hold true potential that has not yet been fully recognized.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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