These 4 stocks could become the Fab 4 of your investment portfolio

Nick Scali Limited  (ASX: NCK) is a quality furniture retailer who has been around for over 50 years. The retail footprint comprises 33 Nick Scali stores and 5 Sofas2Go outlets. Company policy is to have freehold ownership of half the stores and lease the rest, placing hard assets on the balance sheet. The company is extremely well capitalised with no net debt, minimal intangibles and ample cash. If this reads like a well-structured family business, it’s because it essentially is.

This hasn’t stopped Nick Scali from being extremely efficient with progressive reductions in the costs of doing business, including establishing effective stock and distribution systems. The recent half-yearly report had net profit up 22% on a revenue increase of 13.9%. At $2.90, Nick Scali is trading at 14 times expected 2014 earnings and a fully franked yield of 4.3%.

OrotonGroup Limited  (ASX: ORL) also has quite a history, marred by the 2013 loss of the 20-year-old Ralph Lauren licence. In response the company has invested further in its own brand and product range, developed a joint venture with Brooks Brothers and also obtained a franchise agreement with Gap Brands. Due to the costs involved with these moves this company requires some patience.

Selling at $4.05, Oroton is priced at 17 times 2014 earnings and yields a franked 4.5%. Strong growth in earnings can be expected from calendar 2015 onwards.

Slater & Gordon Limited  (ASX:SGH) is a well-established Australian legal business and has moved aggressively (by acquisitions) into the UK market in recent years. The query here is how successfully and quickly these acquisitions can be integrated. The recently released half-year report is positive, with overall net profit up 21.1% on a revenue increase of 22.3%. Indications are the UK division is performing smoothly and beyond initial expectations – partly due to a weaker Aussie dollar.

At $4.50, Slater & Gordon is selling at a 2014 earnings ratio of 16 and a 2% dividend. With likely earnings per share growth of 10%+ over the medium term, Slater & Gordon appeals as a solid growth investment.

Servcorp Limited (ASX:SRV) is the world’s second largest serviced / virtual office provider and is widely regarded as being the technology leader in this industry. Following a recent aggressive and capital intensive expansion into the US, Servcorp shareholders are now poised to reap substantial rewards.

Similar to Nick Scali, Servcorp is very much a family business with Alf and Marcus Moufarrige heading the company. Servcorp is debt free and has a stash of cash on the books.

At $4.38, Servcorp is selling on a 2014 multiple of 16 and a 5% partly franked dividend. With no debt, a very healthy bank account and strong cash flow – Servcorp is well positioned for sustained profit growth over the next few years.

Foolish takeaway

Sustainable growth generally requires capital investment and / or exposure to a growth sector of the economy. With the above companies, Nick Scali has adequate capital on hand to fund organic expansion; Oroton has sufficient monies to develop new businesses; Slater & Gordon has recently established a multi currency loan facility on good terms and Servcorp retains plenty of cash after its expansion phase. Most importantly all are undervalued on future prospects.

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Motley Fool contributor Peter Andersen owns shares in Servcorp, Slater & Gordon, Oroton

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