What an interesting year we’ve had on the Australian sharemarket. Even though the ASX 200 index has traded in a 460-point (or 8%) range since the start of 2014, we’ve seen a 5% fall in the first two months of the year, followed by a quick 7% rise between early February and mid April, followed by a small (at this stage) pullback that started at the end of April.
In that time we’ve seen companies such as some big banks and industrials hit all-time highs, while some formerly high-flying companies have hit rock bottom due to product delays or unfavourable business conditions.
What’s in store for the rest of 2014?
Making predictions on where the stockmarket will head is difficult and will usually come down to luck. Having said that, a number of prominent market commentators believe we will see the ASX 200 index hit 6,000 this year, another 10% or so above where it’s at now.
3 companies ready to buy now!
A 10% gain is never really out of the question, but with global growth improving, hopefully a good budget to come, and rising house prices, there’s every chance positivity will dominate and push share prices higher by the end of the year.
Westpac Banking Corp (ASX: WBC) has had a good start to 2014 but has come off recent all-time highs, possibly due to nervous investors heading into budget talks. Westpac’s 2014/15 yield will be around 5.6% and it is continuing to grow its mortgage book, while successfully cutting fixed business costs such as property and ATM leases.
Santos Limited (ASX: STO) has a good growth pipeline in coming years, with its stake in PNG LNG and Gladstone LNG to start contributing to revenue in the next two years. I believe the current share price will look cheap in coming years.
Macquarie Group Ltd (ASX: MQG) is exposed to the growing merger and acquisition market, which is on track to triple in size this year. The group is also expected to deliver 35% earnings growth in financial year 2015, which should support the share price over the next 12 to 24 months.
2014 hasn’t yet been a great year for stocks, but could quickly become great if analyst forecasts are spot on. The three companies above are all exposed to the improving global economy and should be great acquisitions to any portfolio.
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Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie