Most of the quality, big-name companies are looking pretty expensive at the moment. I currently have a very long watchlist but no companies screaming to be bought at current levels, and so I will continue to wait until I convince myself that they are either worth the current price premium, or until they fall in value to a point where I consider the upside to far outweigh the downside risk. Here are three of my favourite companies at the moment:
Crown Resorts Limited (ASX: CWN)
Crown is going from strength to strength. Under the Crown brand it will soon start building its new luxury resort in Sydney, is upgrading its Melbourne and Perth Casinos, and has started the process of investing in a new casino in Sri Lanka. Meanwhile, it is the 33% owner of joint venture group Melco Crown (NASDAQ: MEPL), which is now worth over $8 billion from a $600 million investment. Incredibly, Melco Crown will also start paying dividends this year which should fund the majority of the Crown Sydney construction. Love the company, but at a price-to-earnings over 20, I’m slightly hesitant to jump in right now.
eServGlobal Limited (ASX: ESV)
eServGlobal provides mobile payment solutions to over 1.2 billion mobile phone users around the world. Its core business is providing users with mobile payment and finance solutions, including services for telcos and loan broking in emerging markets. The core business has been going strong for 30 years, but it’s the new HomeSend service that has me really excited.
Homesend allows users to transfer money from one phone to another in 51 countries. It charges among the lowest commissions in the industry and has access to 1.2 billion users through deals with international telcos. eServGlobal is up over 140% in the last year but has huge potential, particularly in emerging markets. eServ has risen strongly since I suggested it as my February top stock and doesn’t look cheap, though in five years’ time it’ll likely look like a bargain time to buy.
iCar Asia Ltd (ASX: ICQ).
iCar is trying to be the Carsales.com Limited (ASX: CRZ) of Asia. In fact, Carsales recently bought a large stake in the company and is providing technical and management support. iCar is currently in the process of monetising its service, having operated a free-listing model up until the start of the year. Its addressable market in Asia is approximately 10 times that of Carsales.com in Australia and had more than double the amount of car listings online as of early February.
Since starting to monetise at the beginning of 2014, the company announced it had signed on around 1,000 dealers in the first two months, indicating that it is delivering a quality product. The share price has recently pulled back after a very strong start to 2014, I’m hoping for a lower entry price soon.
Long-term investing is all about ignoring the short-term variations in share price, and usually, buying 5, 10, or 15% higher than you’d like can be just fine in the long run, if the company is as spectacular as you believe. While I believe these companies will have great, long futures, I have to do further research to confirm to myself that they are worth their current prices.
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Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned