We asked our contributors to pick their favorite stocks to buy in October. Here are their top ideas.
Mike King: Vita Group (ASX: VTG)
Vita Group owns and operates telecommunications retail stores, including Fone Zone, One Zero, Telstra retail and business centres as well as Next Byte Apple retailers.
Revenues for 2013 rose 6% to $434.7 million, but net profit after tax rose a whopping 107% to $6.2 million, thanks to higher returns from Telstra stores. Strong cash flows allowed the company to pay down debt, with net debt at just $2.8 million.
As the company nears its store rollout program, capex costs are falling, which will result in stronger net income and a robust balance sheet. With 45% of Telstra stores less than two years old, further growth should come as the stores mature.
Trading on a prospective P/E ratio of just 12.9 and paying a fully franked dividend yield above 5%, this is one stock to add to your watchlist.
Motley Fool analyst Mike King does not own shares of Vita Group.
Tim McArthur: Vision Eye Institute (ASX: VEI)
Vision Eye Institute is a $116 million company largely ‘out of sight’ of many investors which is perhaps surprising given the firm is Australia’s single largest provider of treatment to people with eye disorders and eye diseases.
With nearly 70 doctors and surgeons offering many forms of specialist eye care including cataract surgery and vision corrective surgery from eight surgeries in Queensland, New South Wales and Victoria, Vision Eye Institute provides investors with exposure to critical, vision-related spending along Australia’s east coast.
A few years ago the company ran into some difficulties that led to a dramatic fall in its share price. With net debt now down to $37 million and adjusted profit after tax of $9.4 million for the financial year just concluded, the company looks to be back on a solid footing.
Motley Fool contributor Tim McArthur owns shares in Vision Eye Institute.
Claude Walker: Clover Corporation (ASX: CLV)
The main business of Clover Corporation is supplying nutritional supplements to the manufacturers of infant formula. As China becomes wealthier, its middle class wants infant formula. However, Clover faces increasing competition, so investors should watch their margins. Decreasing margins can result in lower profits, even when sales are up.
Clover’s share price took a hit recently when a major customer was impacted by a product recall (which was a false alarm). Clover currently trades on PE 14, with a dividend yield of 3.8%, fully franked.
Motley Fool contributor Claude Walker does not own shares in Clover Corporation.
Owen Raszkiewicz: Allied Healthcare (ASX: AHZ)
Allied is a diversified healthcare company headquartered in Adelaide that invests in, develops and produces next-generation medical technologies.
Small-cap investors should consider investing in Allied for several reasons. Its management has a vested interest in the company, shares are very liquid, it is about to starting selling its products internationally and it’s already drawing in revenue of around $7.4 million.
Allied has risen 322% in six months because it has been granted approval to market its products in Europe, passed significant milestones with its CardioCel technology and formed critical relationships with surgeons and hospitals in the health sector.
The company has established operations in both the US and Europe and has recently won a five-year contract with Mater Misericordiae Hospital in Townsville to implement an infusion management system. It recently conducted a rights issue to fund marketing and on going international expansion plans.
Although it carries a high level of risk, investors should consider this stock because it holds great long-term potential.
Motley Fool contributor Owen Raskiewicz owns shares in Allied Healthcare.
Ryan Newman: QBE Insurance Group (ASX: QBE)
QBE Insurance shares have taken a battering since mid-August. Whilst the stocks had climbed over 60% since the beginning of the year to reach a high of $17.53 last month, it has since fallen away roughly 15% after having delivered a disappointing half-year result, which saw NPAT fall by 37%.
However, now is a fantastic time to buy. Interest rates are low and the Australian dollar is high, which has negatively impacted the share price due to its exposure to the US market. Over the long-term, this stock should deliver strong returns – particularly when dividends begin to increase.
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.
Regan Pearson: Senex Energy (ASX: SXY)
Oil producer Senex has made massive increases in both reserves and production over the last three years. Full 2013 year production was up 108% with sales revenues up 113% to $137 million. Ongoing production will fund a significant exploration plan to drill 30 wells over the next year which should see further strong growth.
Senex has no debt, holds a big pile of cash and has a good historic success rate with drilling. On top of that, the company earns a massive 65% margin per barrel of oil it produces. Combined, these factors reduce risk and offer great upside.
Motley Fool contributor Regan Pearson owns shares in Senex.
Peter Andersen: Sundance Energy (ASX: SEA)
Sundance Energy is a US-based oil and gas producer. Interests are mainly located in three premier oil and gas basins, and the company continues to establish significant increases in proven reserves. In addition, production rates are growing strongly with a median mix of 75% oil and 25% liquid rich natural gas.
Sundance Energy is in a good financial position enjoying solid operational cash flows and low debt. With indicative earnings per share of 16c-18c in calendar 2014, this high growth company is selling at a forward price earnings ratio of less than 7.
Motley Fool contributor Peter Andersen owns shares in Sundance Energy
Andrew Mudie: Silver Chef (ASX: SIV)
Silver Chef provides funding to small- to medium-sized businesses in a range of sectors. Full-year results were impressive with revenue up 36%, net profit up 27%, and dividend up 18%. Since the results the stock has hovered around $8.50, which appears a good, long-term buy, with the company currently yielding around 4% fully franked.
The company will benefit greatly from an improvement in business confidence and lending. Any break below $8 presents a good buying opportunity in my opinion.
Motley Fool contributor Andrew Mudie owns shares in Silver Chef.
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