Motley Fool Australia

5 stocks for the patient investor

Sometimes conducting company research yields undesirable results.

Finding great stocks is not easy and being a stickler on price doesn’t make it any easier to buy what appears to be a great company.

That’s why we build watchlists or wishlists, so if one day the stock falls in price or something favourable happens we can capitalise on the opportunity. That’s exactly what I’ve done with these five companies.

Although they’re great companies with exciting future prospects, I’m waiting for a price drop before I commit to a purchase and I’m also waiting for production reports and anything of the sort to provide further guidance.

In January, I was going to make Northern Star Resources Ltd (ASX: NST) the newest addition to my portfolio but I didn’t. I believe it’s one of the two best gold stocks available. Since January it has rallied over 40%. In the past year, its superior balance sheets allowed it to occupy an enviable position in the gold sector. Just ask Newcrest Limited (ASX: NCM) shareholders!

Another gold stock on my radar is Silver Lake Resources Limited (ASX: SLR). It hasn’t rallied like Northern Star but still represents one of the best – if not the best – way to play the rising gold price. Production growth will be a driver of earnings in the next two years. It’s a low-cost producer and has low levels of debt, meaning cash flows will likely grow in the near term.

In the telecommunications space, M2 Group Ltd (ASX: MTU) deserves a spot in portfolios for both its earnings and dividend growth potential. The owner of Dodo, Primus and Commander recently changed to an organic growth strategy which didn’t bode well with the market. However after solid half-year results, now could be a better time than ever to grab a slice of this up-and-coming telco.

Another big growth story is veterinary services provider Greencross Limited (ASX: GXL). Greencross is seeking to consolidate the vet market throughout Australia via an acquisitive growth model. So far it has a 5% market share, but has ambitions to control 20% in coming years. Although this can be fraught with risk, Greencross’ management seem up to the task and on track to achieving their goal.

With projects in the Cooper Basin and key joint venture partners, Senex Energy Ltd (ASX: SXY), looks to be a promising play on the booming oil and gas sector. It has recently undertaken an aggressive drilling program and notched-up a record profit of $31.8 million earlier this week. It has a strong cash position, no debt and growing reserves.

Foolish takeaway

Warren Buffett is notable for saying price is what you pay value is what you get. Each investor must do their due diligence on a prospective company and be willing to accept the price might not yield enough value to make it a standout buy. I like each of these companies at current prices but I’d love them if they were cheaper.

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Returns as of 6th October 2020

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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