Your instant 6-share diversified portfolio

Despite the market being 'fully valued' there are still some great shares available for long-term investors.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 (ASX: XJO) (^AXJO) has had a bullish run this past 12 months, notching up a 20% return not including dividends. Fuelled by dividend hungry investors, both locally and internationally, many of the index's biggest companies are trading at, or near, all-time highs.

This has prompted many investors to believe the market is fully valued. However, just as they were 12 months ago, savvy investors are still finding value and growth potential in many listed stocks.

For example many investors have been busy buying into blue chip dividend stocks, including the banks and two supermarket giants, pushing their prices higher than what would be considered a good price to pay. One stock that still holds potential for long term growth is Telstra (ASX: TLS).

Telstra exemplifies a 'core' stock (i.e., the type of stock that should make up the base of a diversified portfolio) with its brand recognition, market capitalisation and balance sheets. Similarly, Coca-Cola Amatil (ASX: CCL), despite its huge presence both locally and overseas, appears to have been sold off by short-term investors focused on making a quick buck.

Another long-term stock that has been forgotten by investors focused on the here and now is Cochlear (ASX: COH). Despite the increased presence of a Chinese competitor and doubts over its new product, Nucleus 6, Cochlear has been producing first-class hearing devices for decades and will continue to do so. This is the perfect investment for Foolish (capital 'F') investors because it gives us a chance to buy cheap and let profits run for years to come.

Another stock I have been adding to my portfolio is Challenger (ASX: CGF). When I first considered an investment case for the company, back in July, it was cheap. Since then it has climbed nearly 50% but still operates on low multiples and pays a good dividend. If you want to take advantage of the increasing number of retirees (thanks to the baby boomer population entering retirement), Challenger looks well positioned to do so.

Finally, no diversified portfolio would be complete without a few 'riskier' stocks, highly leveraged to growth. Two stocks I've decided to back are Medusa Mining (ASX: MML) – a gold miner from the Philippines – and Allied Healthcare (ASX: AHZ), a diversified healthcare stock that will face significant revenue increases once its CardioCel technology hits markets worldwide.

Foolish takeaway

Although many blue chip stocks are overpriced, many investors can still grab a hold of some quality long-term dividend payers at a discounted price.

Motley Fool contributor Owen Raszkiewicz owns shares in Cochlear, Challenger, Medusa Mining and Allied Healthcare.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »