The Motley Fool

Top stock picks for May

We asked our contributors to pick their favorite ASX stocks to buy in May. Here are their top ideas.

Regan Pearson: Ebos Group Limited (ASX: EBO)

Little known Ebos Group is an industry-leading healthcare company that owns a sophisticated range of distribution networks for healthcare, medical and pharmaceutical products. It is the largest hospital distributer in Australia and the second largest pharmacy wholesaler.

The company is pursuing aggressive growth organically and through acquisitions. A recent $1 billion acquisition of company Symbion has helped to sling-shot first half NPAT 232% from NZ$15 million to NZ$49.9 million.

Shares trade for around 14 times earnings and the company has delivered a compounded annual growth rate of 19% per annum over the last 12 years.

Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned.

Ryan Newman: Greencross Limited (ASX: GXL)

We are now living in the days of “humanisation of pets”. Dogs and other household pets are coming to be more a part of the family than ever before and owners want the best possible care for their animals.

That’s where Greencross comes in. The company is a provider of veterinary services and is expanding rapidly across Australia – both with its number of vet clinics and retail stores following its merger with Mammoth.

A recent pullback in share price has given us an opportunity to revisit the company’s prospects, which are looking as strong as ever.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Owen Raszkiewicz: Yellow Brick Road (ASX: YBR)

This is the second time I’ve chosen Yellow Brick Road as my top monthly stock pick. The small, diversified financial company is yet to make its maiden profit (which is due in FY15) but continues to grow revenues and its number of branded offices very quickly.

In March, management updated shareholders of its intention to grow both organically and acquisitively and has a goal of being one of the Australia’s biggest non-bank financial companies in coming years.

With conditions rapidly improving in both property and equity markets, individuals are more frequently seeking out services provided by Yellow Brick Road, so now could be your chance to get it while it’s still cheap!

Motley Fool contributor Owen Raszkiewicz owns shares in Yellow Brick Road.

Tim McArthur: Ingenia Stapled (ASX: INA)

Ingenia Communities Group is fast becoming the leading owner, operator and developer of affordable seniors housing in Australia.

There is much to like about this niche provider. First, the aging Australian population provides a significant tailwind for Ingenia as retirees look to downsize.

Second, the boom in Australian property prices also plays to Ingenia’s advantage. Not only does the expensive real estate market make top-end retirement villages less affordable and out of reach for many senior citizens, but Ingenia’s property portfolio, which comprises over 57 villages and estates, benefits from a rise in property valuations.

With a management team focussed on creating shareholder value through a combination of property redevelopment and attractively priced property acquisitions, Ingenia looks to be on a solid growth trajectory.

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

Andrew Mudie: FlexiGroup Limited (ASX: FXL)

FlexiGroup Limited shareholders have had a pretty rough 2014 so far. The share price is down a tad over 16%, compared with a positive return of nearly 4% from the ASX 200. The company has been sold off as investors worried about the future of the company’s solar panel financing business (36% of revenue).

Panel costs have fallen, reducing the need for loans, however FlexiGroup has a plan to counter this lost revenue stream. Its Certegy retail payment plan business saw strong growth last year and the company recently purchased the rental financing division of listed rival Thinksmart Limited (ASX: TSM) for $43 million.

I believe a push into retail is well-timed and should reward investors over the medium term.

Motley Fool contributor Andrew Mudie owns shares in Flexigroup.

Peter Andersen: Countplus Ltd (ASX: CUP)

A solid achiever, Countplus is a professional services aggregator containing a network of 18 accounting firms, a property services group and a financial planning business. Accounting and related services contribute 72% of revenues with the remainder provided by financial planning and property services. Following the acquisition of parent Count Financial, CBA is the largest shareholder.

Accounting and business advice services have been stuck in the slow lane recently, however there are now indications of growing confidence amongst small and medium private businesses. Currently yielding 6.8% fully franked, this quietly growing company has appeal.

Motley Fool contributor Peter Andersen doesn’t own shares in the companies mentioned.

Sean O’Neill: The Reject Shop (ASX: TRS)

A results announcement and a huge market overreaction earlier this year sent The Reject Shop down 45% virtually overnight.

Despite growing revenue by 17.7% in the first half of last year, investors were disappointed with flat comparable store sales and a net profit figure that was down 15.9%, due to a $2 million insurance payout and costs associated with new store openings.

It’s silly to think that investors sold because the company spent money opening new stores that will improve earnings in the future. Still trading around a 37% discount to its previous highs of $16, The Reject Shop is a real bargain.

Motley Fool contributor Sean O’Neill owns shares in The Reject Shop.

Tom Richardson: Sirtex Medical Limited (ASX: SRX) 

Sirtex Medical looks promising given the success of its selective internal radiation therapy technology in treating liver cancer. This alone gives it a great growth runway in providing the treatment as a last resort for inoperable liver cancer.

It’s developing a strong reputation and has achieved (public) reimbursement in a number of major markets and continues to seek reimbursement in new markets.

Sirtex wants to develop the technology as a worldwide standard for treatment of primary liver cancer and is currently funding five major clinical studies to look for new applications for the existing technology. It has big potential.

Motley Fool contributor Tom Richardson has no financial interest in Sirtex. 

Tim Roberts: Atlas Iron (ASX: AGO)

Atlas Iron recently released its March 2014 quarterly report. Once again management have managed to achieve or exceed guidance and provide some impressive numbers for the period. Key highlights include:

  • A record 2.73 million tonnes shipped for the quarter (Despite inclement weather)
  • Confirmation that full year production will be in the top half of the previously stated guidance of 10.2-10.7 million tones shipped
  • Cash operating costs of $49-$52 per tonne
  • Cash on hand of $372 million (After investing $102 million in growth projects)
  • EBITDA of $57-$63 million for the quarter

The market is overly concerned about a likely fall in the spot iron ore price. Any fall will remain well above the cost of production, and with high cash and low debt the risk is to the upside makes Atlas my top stock pick of the month.

Motley Fool contributor Tim Roberts owns shares in Atlas.

Chris Koenig: Mincor Resources (ASX: MCR)

Mincor Resources is a nickel stock that mines two exceptionally rich deposits in Western Australia. Unusual for a mining stock, it has consistently paid an interim and final dividend every year since 2005. The half-year dividend has varied from 1.5 cents to 6 cents, depending largely on the price of nickel.

Currently, with Indonesia no longer exporting nickel ore, the supply demand imbalance is favouring a relatively high nickel price. In addition, recent production figures and exploration results point to strong earnings in the medium term.

I think that Mincor could as much as double to $1.80 within a few months, based on sound business fundamentals and knowing that its share price reached $2.92 five years ago.

Motley Fool contributor Chris Koenig owns shares in Mincor.

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