Although it hasn't been the ideal start to the year for the Australian market, with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) having fallen 0.7% in its first four trading days, a number of analysts are still predicting that 2014 could see the benchmark index hit the 6000 point mark on the back of a lower Australian dollar and an uptick in credit growth.
Given that the market is currently trading at 5317 points, this would reflect a gain of 12.8% following last year's climb of just over 15%. On the other hand, some experts are predicting another year of sub-trend growth which would restrict returns.
As has always been the case, there is no actual way of knowing how the market will perform in the short-term. It will increase in the long-term – that much is a given – but its performance over the next year is anyone's guess. As such, it is important that investors buy companies they believe can deliver gains for years to come. Here are three strong companies to consider:
Amcor (ASX: AMC): A number of analysts have tipped the global packaging company as their favourite stock for 2014 and it's a fairly safe bet for investors. The company holds a market capitalisation of just under $13 billion and generates most of its earnings from outside of Australia, reporting in US dollars. A stronger US dollar will reflect a greater profit when reported in Aussie dollars. The company continues to seek growth from the US, Europe and Asia, which should see its shares perform strongly.
Coca-Cola Amatil (ASX: CCL): It was a year to forget for shareholders in the beverage manufacturer and distributor as shares dropped in response to profit warnings and pricing pressures from various parties, including Schweppes as well as supermarket giants Wesfarmers (ASX: WES) and Woolworths (ASX: WOW). However, the company has returned to the beer market following a two-year hiatus and is also set to benefit from strong growth in Indonesia.
With shares currently trading 12.4% below where they sat this time last year, now could be a fantastic opportunity for shareholders to take advantage of the lower price.
BHP Billiton (ASX: BHP): There are risks facing the sector, but BHP's high levels of diversification make it a safer bet than others in the mining industry. The company is set to benefit from a resilient iron ore price given that it's ramping up its production levels while it is also focused on heavy cost cutting and ridding itself of non-core assets. The company should also continue to increase its dividend payments in response to shareholder pressure.
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