Crunching some numbers, I wanted to find stocks that had good earnings track records in the recent past and are thought to have sturdy growth in the near future. These are some of the stand-out companies that fit the bill.
Aristocrat Leisure Limited (ASX: ALL)
The gambling-machine maker has the number one market share in the gambling and vending machines’ manufacturing industry, though followed very closely by the number two Ainsworth Game Technology Limited (ASX: AGI). Also, it holds the number one market share of gaming machines in the Asia Pacific region.
With more casinos being developed in places like Manila and the possibility of Japan relaxing its gambling legislation, the potential for more gambling venues looks brighter. The QLD government is planning to create three new gambling licenses, and they will all need brand new machines.
Over the past three years the total shareholder return was an average annual 16.7%, EPS growth was a compound annual 23.6% average, and median analyst forecasts project a 14.8% annual EPS growth over the next two years.
Flexigroup Limited (ASX: FXL)
Provides leasing, vendor leasing finance and other payment solutions for consumers and businesses. It has developed networks that have it working directly with retailers like electronic goods and furniture stores for low or no interest financing that consumers will want to take out as the housing market improves.
It has also established a credit card service as well as personal loan provision through its Lombard Finance business.
Three-year total shareholder return was an average annual 45.9%, it had 16.6% EPS growth in 2013 and consensus analyst forecast projects an average annual 14.8% EPS growth rate for the next two years.
Macquarie Group Ltd (ASX: MQG)
The investment bank may have more opportunities to be involved as an advisor in 2014, in a year that is expected to have more mergers & acquisitions activity as well as a bigger IPO market than 2013.
In addition, it is getting more involved in the residential-loan market, taking advantage of the growing number of loans from the housing market revival.
Within the past year, its share price has improved strongly on the back of a 21.6% increase in EPS in 2013. Its past three-year total shareholder return was an average annual 17.1%, and a median value of analyst forecasts are for estimates of an average 28.2% in EPS growth annually over the next two years.
Apart from the estimates, investors should become very familiar with how these companies operate, learning their SWOT points – strengths, weaknesses, opportunities, and threats. That way when new updates come out, you can more accurately judge how well they are sticking to their growth stories.
Homework never stops for investors, but neither do good returns for those who do their homework.