The market is weird, every time one guys sells, another one buys, and they both think they’re smart – Soccerwidow.com
We sometimes forget it but every time we trade a stock or share, we are at odds with the person on the other side of the transaction. We’re buying for one reason, while they’re selling for who knows what.
But once a stock price has plateaued after a rally, it make buyers’ nervous. Are the gains finished? Is there something I don’t know?
Whenever the stock price has rallied it means more investors have demanded a piece of the company while fewer were willing to supply it. So with that in mind, let’s take a look at the recent movements in the share prices of Telstra Corporation Ltd (ASX: TLS), Village Roadshow Limited (ASX: VRL) and Coca-Cola Amatil Limited (ASX: CCL) and see if they’re still worthy of your dollars.
First up Telstra is a market darling for both its safety and dividends. Its – now 5.7% – fully franked dividends were one big reason the stock rallied from 2012 to 2014, in the opposite direction to interest rates. However Telstra couples its dividend with growth prospects such as its network application services division and international expansion. Even at current prices, it appears buyers are making the right call.
Village Roadshow also pays a juicy dividend and has exposure to a number of different geographical and industry markets. Its revenues stem from its theme park ownership (such as Wet’n’Wild, Outback Spectacular, Sea World and Movie World), film distribution and cinemas. Its share price has continued to grow on the back of a solid set of earnings. As a result it now trades on a current price-earnings ratio of 19. Despite the seemingly high valuation, Villages track record, key businesses and household name has proven time and again that this stock is worth paying up for.
At the opposite end of the spectrum, Coca-Cola Amatil has been anything but impressive. Its troubled SPC Ardmona business recently hit headlines as the federal government refused to help the business, only to have the state government pitch in some cash. Nevertheless Coca-Cola Amatil commands one of the most iconic brands in the world and its parent company The Coca-Cola Company has been doing business for longer than most of us have lived. It has a proven business model and product with a beaten-down share price, now is the time to buy it.
These three companies are household names throughout Australia and, to an extent, throughout the world. It’s no wonder why Telstra’s and Village Roadshow’s share prices have outperformed. All of these businesses offer strong dividends and a range of characteristics which could enable them to fit into almost any portfolio.