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The top 5 stocks you should have bought at the start of the year

Since the beginning of the year, the share market has gone virtually nowhere. The benchmark S&P/ASX 200 has finished the quarter up just 0.5%, despite the best February earnings season in five years.

But despite the index’s poor performance, several stocks have done much, much better. If you want to know which stocks you should have bought on the first trading day in early January, here they are.

G8 Education Ltd (ASX: GEM) has rocketed up 60.4% to $5.07, after the childcare centre owner made multiple acquisitions, including its most recent one of Sterling Early Education for $228 million. G8 acquired 6,203 licenced Australian places to bring its total to 27,995 places, but still has a minority share of the market. There may be plenty more growth to come in future years, as long as the company sticks to its strategy of buying childcare centres at cheap prices, and doesn’t overly extend itself debt wise.

Gold miner Northern Star Resources (ASX: NST) was the second best performer, rising 44% to $1.13. Northern Star is also the beneficiary of making acquisitions, buying Barrick Gold Corporation’s interest in the Kanowna Belle and Kundana mine operations. The transaction will see Northern Star move from a small-time gold producer with one mine, to the fifth-largest ASX-listed gold miner.

Fairfax Media Limited (ASX: FXJ) climbed 43% to 91.5 cents, and I’m still kicking myself after selling out in October last year with a 50% gain. Had I held on, I’d be look at a double-bagger with a return of over 100%. Fairfax is restructuring itself to take advantage of its previous old media newspaper assets, has sold off a number of assets to pay down debt, and focusing on generating revenues through its network of internet sites, including real estate site Domain and relationship website RSVP.

Western Areas Ltd (ASX: WSA), a nickel miner, has seen its shares soar 40.1% to $3.32, after Indonesia banned nickel exports and the potential for economic sanctions against Russia over the Ukraine. Reputedly having the highest nickel ore grades in Australia, Western Areas is also a low cost producer, and a company that we have highlighted as a company to watch a number of times this year (here and here).

And our finalist in the top five is Evolution Mining (ASX: EVN). Gold miner Evolution’s shares are up 39.8% year-to-date at 86 cents. With all-in-sustaining costs of US$987 per ounce in its most recent half, Evolution is earning a decent margin, with the gold price currently around US$1,294 an ounce.

Foolish takeaway

As they say, “past performance is no indication of future performance”. Next quarter’s top five stocks are very likely to be totally different, but of the five stocks above, you may want to add G8, Fairfax and Northern Star to your watchlist.

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Motley Fool writer/analyst Mike King owns shares in G8 Education. You can follow Mike on Twitter @TMFKinga

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