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These promising companies could be good for your portfolio growth

Promising companies come in different shapes and sizes. They could be working in your local area and you might not even notice them. Or their business may not sound particularly exciting, yet they do well financially just the same – sometimes because the industry doesn’t attract a lot of attention or competitors.

Here are three stocks that match that description. They are moving ahead and they just might be a promising addition to your portfolio.

One company that has kept up its steady growth is InvoCare Limited (ASX: IVC), the funeral home, cemetery and crematorium service provider. It operates the White Lady and Simplicity branded funeral service companies and has businesses in Singapore.

The general business rises at a stable pace based on the average annual death rate. It can fluctuate year by year, yet over the long-term the annual numbers rise with the growth in population.

In addition to this natural growth, the company acquires other funeral home businesses. Due to the nature of the industry, there aren’t a lot of other new companies that try to enter the market and many existing funeral homes are single, privately owned businesses. Invocare can patiently acquire businesses over time.

Iluka Resources Limited (ASX: ILU) is the world’s largest producer of zircon and produces high grades of titanium oxide, a material used for paint and colouring pigments, the creation of titanium metal and many other industrial uses.

Its largest market, China, has ongoing urbanisation plans that will create more demand for paint in homes, tiling and cars, as well as increases in the use of titanium for aircraft and medical procedures. The company will be moving higher in its industry cycle, raising expectations for stronger business growth.

Another stock that could see solid growth in the short and mid-term is Tox Free Solutions Limited (ASX: TOX), the waste management company. It has a good track record for consistent revenue and earnings increases, almost doubling underlying net profit from 2011 to 2013. On top that, its FY2014 interim result saw a 22% rise in underlying net profit.

It generates income from many different industries, being well diversified, with the oil and gas industry and commercial operations being the largest segments. It also works with such customers as Chevron Corporation (NYSE: CVX), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). It can be seen in many cities managing rubbish collections or maintaining hazardous waste materials sites.

Foolish takeaway

Knowing the nature of how a company grows and whether it is a cyclical business will help you adjust your expectations of the company and provide a knowledge level as to a good time to buy.

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*Returns as of February 15th 2021

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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