The Motley Fool

Top stock picks for January

Happy New Year! We asked our contributors to pick their favorite stocks to buy in January. Here are their top ideas.

Reagan Pearson: SkyCity Entertainment (ASX: SKC)

SkyCity Entertainment is my top stock for January. A very recent addition to the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), SkyCity has a number of very attractive features, including monopoly positions of all its casinos across Auckland, Hamilton, Adelaide and Darwin.

The company has big growth plans, investing almost $800 million into redevelopments of its Auckland and Adelaide complexes over the next few years, which is set to significantly increase future cash flows. Trading at a reasonable price and paying a 5% dividend, this company would make a strong long-term addition to your portfolio.

Motley Fool contributor Regan Pearson owns shares in SKC.


Andrew Mudie: BHP (ASX: BHP)

My pick for top stock in January is BHP. While it’s unlikely the share price will rocket away in the first month of 2014, BHP has returned only 1.2% in 2013 even though resource prices have remained at or above long-term averages, there was no China hard landing, and volumes have risen strongly.

BHP is forecast to increase earnings-per-share by 10% in 2014 and is trading on a forward price-to-earnings ratio of around 13, below its long-term average. The materials sector as a whole has been out of favour in 2013, but I expect 2014 and beyond to handsomely reward miners that grow production and earnings.

Motley Fool contributor Andrew Mudie owns shares in BHP


Tom Richardson: Magellan Financial Group (ASX: MFG)

I like the prospects of this money manager to keep growing at rapid rates. What’s most impressive is the rate that funds under management (FUM) have kept growing, mainly thanks to inflows of money from institutional clients across the globe.

Total FUM has gone from $4 billion as at 30 June 2012, to $19.89 billion in November 2013. That’s mighty impressive and with a massive global marketplace to keep tapping, Magellan appears to have the track record, management team and distribution capabilities in place to deliver strong long-term growth. The group is priced for earnings growth, but not exceptionally so. Recently trading around $10.60 it looks fair value.

Motley Fool contributor Tom Richardson owns shares in Magellan Financial Group.


Owen Raskiewicz: Global Health (ASX: GLH)

Global Health is a tiny software applications developer in the healthcare industry. 2013 was the first year it made a profit and, subsequently, its share price shot up nearly 800%. Its products, such as Mastercare, referralnet, lifecard and Hothealth, are designed to bring together medical professionals from all parts of the industry.

Psychologists, doctors and specialists can simply download their preferred applications from the internet and connect their client base and share information. Despite its strong rise, the stock still trades on relatively healthy multiples and management are targeting 25% profit growth in 2014.

Motley Fool contributor Owen Raskiewicz does not own shares in Global Health.


Chris Koenig: Fortescue Metals Group (ASX: FMG)

Fortescue Metals Group has joined the big league of iron miners alongside BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO). Unlike BHP and Rio, which have other interests, Fortescue, as a pure play, seems most suitable as an iron ore producer.

In the September production report, it was stated that Fortescue has consolidated its operational and financial position, noting that peak net debt has passed. Currently at over $140 per tonne, iron ore is highly profitable as the marginal cost of production for Fortescue is well under $60 per tonne.

Unless the price of iron ore collapses, which seems unlikely in 2014, it should be plain sailing for Fortescue, which has the reserves and infrastructure already in place to exploit long term growth of China and other Asian countries as they continue to industrialise for many more years.

Motley Fool contributor Chris Koenig does not own shares in Fortescue.

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