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ASX hot stocks: Macquarie Group Ltd, Boral Limited, Crown Resorts Ltd and Harvey Norman Holdings Limited

It’s the home stretch now as investors prepare to enter the final quarter of the 2014 financial year. Looking back over the past three quarters – not surprisingly – some companies have performed much better than others. The following four stocks have all significantly out-performed the market this financial year and there are reasons to be positive that their good form could continue.

Macquarie Group Ltd (ASX: MQG) is up 30% this year on the back of a much improved earnings performance and outlook for the group. Recently the investment bank confirmed guidance for full year profit to be up between 40% and 45%. Macquarie now boasts $433 billion in assets under management yet its return on equity (ROE) for the first half of 2014 was only 8.7%. The firm’s leverage to higher equity markets and higher corporate activity should help ROE normalise closer to its long-term average which suggests significant upside potential for earnings still remains.

 

Boral Limited’s (ASX: BLD) share price has soared 33% in the past year as the building materials firm begins to benefit from the leverage its fixed cost base has to higher volumes. With most economists foreseeing a significant increase in home building in Australia in the coming years, Boral’s earnings should continue to kick higher for some time yet.

 

Crown Resorts Ltd (ASX: CWN) has provided shareholders – including major shareholder Mr James Packer – with returns of 36% this financial year. The announcement that Melco Crown Entertainment Ltd (ADR) (NASDAQ: MPEL) – in which Crown has a strategic shareholding – will be paying a special dividend and has approved a new dividend policy bodes well for future payouts to Crown Resorts’ shareholders too.

 

Harvey Norman Holdings Limited (ASX: HVN) has been one of the top performing retailers since 1 July 2013 having gained 28%. In contrast many of its peers have underperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) return of around 12%. Despite the hefty looking earnings multiple that Harvey Norman is trading on, the retailer’s exposure to furnishing new homes could see its earnings rise if the expected increase in house building does occur.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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