We asked our contributors to pick their favorite stocks to buy in December. Here are their top ideas.
Tim McArthur: Cedar Woods (ASX: CWP)
Cedar Woods is an property developer that largely seems to fly under the radar of investors despite having a market capitalisation of nearly $500 million and an solid track record of growing revenues, earnings and dividends. For the year ending 30 June 2013, the company reported a return on equity of 17.5% and a return on capital of 21.6%.
The company recently provided an impressive first quarter operational update, which highlighted the strong demand the company’s projects are experiencing in both Victoria and Western Australia. The company also provided guidance for the current financial year that net profit after tax (NPAT) would be approximately $40 million; this represent an increase of 10% on last year’s NPAT. The stock is currently trading on a historic price-to-earnings ratio of 12.7 times which is below its peer group and would appear undemanding given Cedar Woods’ exposure to the buoyant housing market.
Motley Fool contributor Tim McArthur owns shares in Cedar Woods.
Sean O’Neill: Woolworths (ASX: WOW)
Everybody should be familiar with Woolworths. Given its plans for expansion, this company has excellent prospects for growth over the coming years.
Owing to its apparently similarity to Bunnings, Woolworths’ Masters hardware chain should have no difficult taking a number of customers away from its Wesfarmers (ASX: WES)-owned competitor.
Woolworths also has a number of stores under construction in prime locations in New Zealand, and reported a growing NZ market share for FY2013 that should continue this year. With expansion in these areas and others besides, Woolworths looks likely to hit the double-digits growth targeted by management for FY 2014.
Motley Fool contributor Sean O’Neill doesn’t own shares in Woolworths or Wesfarmers.
Chris Koenig: Senex Energy (ASX: SXY)
Senex Energy has a thriving oil business and holds an impressive acreage in Australia’s largest onshore energy area, the Cooper Basin.
Its strategy is focused on continuing the success of the oil exploration in the South Australian and Queensland Cooper Basin with the intention of growing oil production and revenue. This will provide the funds to develop the long-term growth potential of coal seam gas reserves in Queensland. The company has contracted two rigs to drill 30 exploration and development wells in the current financial year.
This is definitely one to watch for the long term.
Motley Fool contributor Chris Koenig owns shares in Senex.
Ryan Newman: Coca-Cola Amatil (ASX: CCL)
Given its globally popular brands, this company needs no introduction. Although it has proven to be a strong performer for shareholders for years, it’s been a rollercoaster ride these last 12 months as pressures from Woolworths (ASX: WOW) and Wesfarmers (ASX: WES), as well as from arch-rival Schweppes, have impacted the company’s earnings.
However, with shares currently sitting at just above $12 each, now represents a fantastic time to buy. The pricing war with Schweppes cannot go on indefinitely, and the strength of Coca-Cola Amatil’s business will be highlighted in the long term, providing a strong foundation for your portfolio.
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.
1300 Smiles (ASX: ONT)
1300 Smiles is considered to be expensive by many investors, but I believe it represents growth at a reasonable price. One of my favourite companies, 1300 Smiles is on a mission to lower the cost of dental health care. At the current price of $6.51, shares pay a dividend yield of 2.8%, fully franked.
The stock is undoubtedly priced for growth, and I’m confident that over the long term, growth will come. The founding managing director, Dr Daryl Holmes, reported at the AGM recently that the company is achieving pleasing results with its recently launched Improving Smiles program. The company diligently seeks the right acquisitions, has no debt, and provides an essential service. I consider it an excellent defensive investment for the very long term.
Motley Fool contributor Claude Walker owns shares in 1300 Smiles.
Slater & Gordon (ASX: SGH)
History shows lawyers have a well-deserved money-making reputation; throw in an entrepreneurial flair and you have the recipe for a well-run and fast-growing business.
The lawyers at Slater & Gordon are now fast entering the far larger UK market, with a string of acquisitions expanding the revenue base. Don’t underestimate brand power either — Slater & Gordon has big plans here and this is a strategy that should see it keep on winning.
Despite big price gains recently, the price-to-earnings ratio is far from stretched at around 18, with a growing dividend as well. So let the lawyers do the long hours as you enjoy the long-term gains.
Motley Fool contributor Tom Richardson owns shares in Slater & Gordon.
Owen Raskiewicz: Myer Holdings (ASX: MYR)
Myer is about to receive a two-pronged macroeconomic tailwind: low interest rates and rising consumer confidence. Although it may not be the most efficient of all the ASX retailers, it pays a very strong dividend and I believe both its online and in-store sales will be boosted by consumers who want to spend more this holiday season thanks to the record low interest rates on offer from the RBA.
Long term, Myer will also benefit from a lower cap on GST-exempted goods and its online presence is now catching on with customers.
Motley Fool contributor Owen Raskiewicz owns shares in Myer.