3 growth stocks for 2014

Investors will have to look outside the top 200 stocks for growth in the next year.

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

2013 has been a great year for equities despite quantitative easing (QE) never ending, North Korean tensions, a possible Chinese economic slowdown and ongoing issues throughout the Middle East and Europe. In fact the S&P/ASX200 (ASX: XJO) (^AXJO) has notched up gains of 13% (not including dividends) in the past year.

That means many of Australia's biggest stocks have already risen substantially from their levels 24 months ago. However in the past year the S&P/ASX Small Ordinaries (ASX: XSO) has fallen 5.56%. Although many small mining related stocks would have fallen harder, the under-researched and under-invested small cap space could be ripe for the picking.

One stock that is set to go skyward in the next year is Newsat (ASX: NWT). Newsat was once a telecommunications services provider but is now Australia's only pure play satellite communications company. In 2014, thanks to its Jabiru satellite development program, Newsat will launch its satellites and cover much of the developing world. This will result in massive revenue increases from huge private and government contracts.

If 2014 is going to be anything like 2013 (RBS Morgans believes it will be), then fund managers and financial advisors will have no problem drawing in new customers. When the stock market does well, everyone piles in and wealth managers can notch up easy gains. Yellow Brick Road (ASX: YBR) is a junior wealth manager that has a bright future ahead. The founder of Wizard home loans, Mark Bouris, heads it. With a market capitalisation of only $107 million, its got plenty of room to grow.

If you're looking for yield in 2014 but still want a big growth story then perhaps established small caps are what you need. RCG Corporation (ASX: RCG) is a holding company for Athletes Foot and RCG Brands, which include Merrell, Cushe and CAT footwear. Recently the company announced an acquisition of the Saucony wholesale businesses in Australia and New Zealand. It pays a reliable 5.6% fully franked dividend and Morningstar is predicting strong earnings per share growth in the next three years.

Foolish takeaway

By all accounts it looks like the next year will be a big one for the Australian stock market as we transition away from mining-related investment. With rising consumer and business confidence, now might be the perfect time to get into smaller stocks before the rest of the market.

Motley Fool contributor Owen Raszkiewicz owns shares in RCG Corporation and Yellow Brick Road. 

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 »