The last 11 months have seen the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) climb to fresh multiyear highs in spite of subdued consumer and business confidence as the after-effects of the GFC continue to flow through the global economy.
With interest rates hitting record lows, investors trended away from the safety of term deposits or bonds and instead sought out high-yielding dividend stocks, such as the big four banks, Telstra (ASX: TLS), Woolworths (ASX: WOW) or Wesfarmers (ASX: WES).
For instance, whilst NAB (ASX: NAB) has delivered investors with a return of 37% since the beginning of 2013 (that's not even including dividends), ANZ (ASX: ANZ), Westpac (ASX: WBC) and Commonwealth Bank (ASX: CBA) have also returned between 25% and 28% to investors.
Where will the market go in 2014?
Whilst 2013 saw the market rally however, the year is drawing to a close with just 20 trading days remaining for the calendar year and, like anybody else, we have no way of knowing which direction the market will go in 2014. It could continue its stellar run and, as some analysts have predicted, reach the prized 6000-point mark – or it could fall as investors sell their blue chip stocks recognising that many of them have become overpriced.
As such, it remains imperative that investors maintain a diversified portfolio, beginning with a strong core. Here are three stocks I believe represent good buys for the 2014 calendar year.
Three excellent opportunities
As previously mentioned, a strong core has traditionally consisted of companies such as one of the banks or one of the supermarket giants. However, these stocks have become overpriced and stand little chance of delivering market-beating returns in the long run. Instead, Coca-Cola Amatil (ASX: CCL) could provide the fizz your portfolio needs for 2014.
It has been a disastrous year for the company, which has revised its full-year earnings to 5-7% below the previous year's result due to a pricing war with rival Schweppes. The news has resulted in the company's shares falling 11.4% since the beginning of the year. However, the pricing war cannot continue forever and the strength of Coca-Cola's business should see the shares recover strongly in the long-term.
Collection House (ASX: CLH) is another company that would be an excellent addition to your portfolio at today's price of $1.70 per share. Following a capital raising aimed to strengthen its balance sheet and increase its ability to take advantage of future investment opportunities, the receivables management company's shares have fallen from their high of $1.98.
Collection House continues to perform strongly, having announced a 23% increase in net profit after tax (NPAT) for its full-year operations.
Telstra is a strong company (and is only getting stronger!) but M2 Telecommunications (ASX: MTU) is certainly making a name for itself in the sector and presents as another attractive opportunity. Following a long string of acquisitions, including iPrimus and Dodo, the company will now focus on growing its brands and paying off the debt that it has accrued.
At today's price of $5.88 per share, investors could recognise substantial gains over the next year (or ten).
