Super-investor Peter Lynch popularised the notion that ordinary investors could use their everyday knowledge to spot investment opportunities. For example, in 2012 I used Nearmap (ASX: NEA) for planning solar projects.
Nearmap provides high quality birds-eye-view aerial photos, and also has planning tools that allow you to measure distances. It is superior to Google maps for a multitude of reasons. Unfortunately, I didn't realise that the company was listed on the ASX. Its shares were trading at about 5 cents in late 2012 (at that point, I already knew it was the best product of its kind). Shares currently trade at 54 cents. In that spirit, here are three companies that you might come across this Christmas.
More than a few readers probably know of David Jones (ASX: DJS). Motley Fool contributor Peter Andersen has opined that David Jones "has transitioned from being an old fogey retailer with antiquated systems to a contemporary multi-channel merchandiser." On the other hand, I think David Jones lacks industry tailwinds, doesn't have the involvement of a founder, has attracted the attention of ASIC with questionable director trades and has been too slow to build online sales channels.
However, for some of the reasons I've outlined, shares in the retailer are available at a reasonably attractive price. The company is expected to yield over 5.5% in FY 2014, and owns valuable real estate. Reasonable minds may differ on the merits of David Jones as an investment, but one indication of whether the company has bright long-term prospects will be their sales this Christmas. If you own shares in David Jones, or are considering buying them, you should ask around and see if any of your friends visited the store this Christmas. Do you shop at David Jones?
Another Australian company looking to boost sales this Christmas is Treasury Wine Estates (ASX: TWE). The troubled wine-seller recently announced that it had far too much inventory in the US, and the share price tumbled about 20% as a result. The stock yields just over 3% at current prices and the company owns a large variety of Australian wine brands. Their brands include Penfolds, Fifth Leg, Annie's Lane, Wynns Coonwarra Estate and Jamiesons Run. Be careful though, testing all their products on your own could be hazardous to your health!
For those lucky enough to share their Christmas with young ones, it might be worth checking out their favourite toys. Funtastic (ASX: FUN) manufactures toys in Hong Kong and China and distributes them to Australia and overseas. Although 70% of the revenue of the distribution business comes from external suppliers, the company also distributes its own brands. Funtastic's brands include Floaties, Chill Factor (slushy makers), Razor (scooters) and Pillow Pets. The company has most to gain when their own brands become popular.
Foolish takeaway
For better or for worse, Christmas has become somewhat commercialised, and is an important time of year for retailers. Investors should take the opportunity to observe what products are most successful. If you observe a company's success before they report their half yearly results, it might give you an edge over other investors.
